McDonald's downturn Not Loving It

As today's more discerning customers continue to fall for ethical, healthy and locally produced food, the old fast-food giants such as McDonald's are finding it increasingly hard to keep up.
Has the McBurger had its day?

Until only a few years ago, the act of questioning restaurant staff about the origins of a dish’s ingredients elicited little but irritation. A conscientious attitude towards food salved any concerns about the environment, but was largely thankless.

We just had to eat what we were given, meat and fruits from all corners of the world whatever the season. It was a reflection of a globalized society dedicated to churning out goods and services.

Fast-food chains such as McDonald's spread like wildfire, with hardly anyone giving a thought to the methods behind this quick, cheap food.

But today, eating habits in the West are changing radically. Health-conscious parents almost choke on their ginger tea if anyone suggests their children celebrate a birthday at McDonald's.

This new era is giving rise to trends such as the slow-food movement, proponents of which cook only with regional and seasonal products. In this new age, city dwellers sip lactose-free soya-latte, snip only organic vegetables and treat themselves with gluten- and sugar-free muffins.

Health & beauty – a prudent, ethically correct lifestyle – is the new status symbol.

Websites such as Hello Fresh, which delivers fresh, portioned ingredients along with a recipe to homes from Australia to Germany, are booming.

Such developments are causing many corporate rethinks. For example, Fabian Siegel used to be the managing director of Delivery Hero, a German online ordering service for pizzas and burgers. Today he touts healthy, regional foods and has set up the home-delivery service Marley Spoon.

Health & beauty – a prudent, ethically correct lifestyle – is the new status symbol. And that's why healthy eating is booming.

In this context, a McDonald's restaurant seems like a dinosaur. No wonder customers are staying away and revenues are falling. As a result, the company is giving itself a makeover and testing new strategies in Germany.

Now, customers in selected restaurants can order meals on a touchscreen. In the future, burgers and fries will be brought to the table, and it will be possible to make payments using a smartphone. The chain also hopes a new premium burger — fresher, plumper — will help it to compete with chic chains such as Germany’s Hans im Glück.

The showcase store for McDonald's new blueprint opened in Frankfurt in March. The new restaurant, fashionably furnished and free of the smell of deep-fried food, is supposed to kick-start the turnaround. But this new concept won't dig the U.S. company out of its hole.

The McDonald's strategists are ignoring the current trend in the food industry: The demand for healthy, ethically produced food. The McDonald's measures seem at best like a scramble to catch up.

Placing digital orders? That’s been the norm for a while at competitors such as the fast-food restaurant Vapiano. Eating quickly and cheaply? Plenty of fast-food joints now offer that service.

Yet each new day brings the opening of a new fast-food temple where customers dine on seemingly healthy food in style. In the United States, the most successful chains are Just Salad, Chop't and Lyfe Kitchen. Germany has Vapiano and Sattgrün. McDonald's has also ignored the growing market for a home-delivery service — except in Osnabrück, where a single restaurant is piloting the concept of McHome.

Premium burgers and premium inventory — all that will likely not be enough to lure customers out of the organic food temples. McDonald’s isn’t expanding its brand credibly in that direction. It remains a burger joint because, among other things, some customers’ only concern is cheap food.

That image is likely to continue to be lodged firmly in consumers’ minds. The fast-food chain has cleaned up its facade, but behind it the old McDonald's remains.

 

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