Donald Thompson, the CEO of McDonalds, stepped down last week after the company reported a 21% decline in quarterly profit. How did McDonalds, the global leader in fast food, get to this point? The consumer focus on healthy, sustainable foods likely is driving the success of perceived healthy restaurants like Panera Bread, Au Bon Pain, and Chipotle, while negatively affecting those not changing quickly enough.
Companies like Chipotle are very popular with consumers due to their healthy and sustainable image. Chipotle stock has increased 48% from one year ago, compared to McDonalds stock which has increased just 0.18% over the last year. Federal policies are also being implemented to support healthy eating, as the menu labeling requirements required by the Affordable Care Act (ACA).
This is exactly what the Vitality Institute’s recommendation “Making markets work for health promotion and chronic disease prevention” is all about.
So can McDonalds get back on top, and how? The new CEO, Steve Easterbrook, must lead the company to innovate and respond to consumer health trends, while respecting consistent customer needs including taste and value. Sounds complicated. However, McDonalds could achieve this by tackling some of the worst “health offenders” on the menu, such as the Big Breakfast with Hotcakes, coming in at 1150 calories with 60 grams of fat and 2260 miligrams of sodium (to put this in context, the Dietary Guideline daily salt limit is of 2,300 mg!). One way to address these high calorie items is by reducing portion sizes; half the portion is half of the calories. At the same time, the company should consider how to create and market tasty and affordable products that are also healthy. While McDonalds currently highlights products under 400 calories, these items do not heavily overlap with the Dollar Menu, so consumers are faced with clashing incentives and the wallet often wins.
McDonalds also faces the challenge of being a big company, with more than 36,000 restaurants globally and 1.9 million employees. Rapid innovation is often difficult for large companies but can be done successfully. This has been demonstrated by Walmart, who revamped their focus over the past decade to incorporate sustainable business practices and currently support healthy eating with the Great for You icon.
McDonalds has no choice but to quickly improve their menu to bring in customers seeking healthy and sustainable foods. From there on, it is both consumers and Wall Street who will determine what lies in store for the fast food giant.
Do you think the new CEO can turn around McDonalds? How would you suggest the company innovates to improve the health and sustainability of menu items to compete with the current leaders? Do you know other example of companies who have managed to reinvent themselves and/or adapt to new consumer trends? Share your ideas with us as a comment below, or on Twitter by tagging us @VitalityInst.
Image Source: Everything of Cooking
