McDonald’s isn’t just the country’s largest restaurant chain; it dwarfs all the others. If you compare its annual domestic sales to those of the next three top-selling chains — Subway, Starbucks Coffee and Burger King — McDonald’s still outsold them all by more than $3 billion in 2013, according to NRN’s Top 100 data.
But the Golden Arches have lost some luster since Don Thompson took over as McDonald’s Corp.’s CEO in July 2012. The chain of more than 35,000 restaurants worldwide has seen declining sales, supplier woes, limited time offers gone awry, franchisee unrest and diminishing favorability scores among consumers, not to mention attacks from labor organizations for which McDonald’s, as the 800-pound gorilla of chain restaurants, is the perennial lightning rod.
Four months after Thompson took his post,McDonald’s reported its first monthly same-store sales decrease in nearly a decade. That could have been blamed on robust sales a year earlier that were difficult to beat, but the decline continued and McDonald’s reported a 1-percent decrease in profit for the year.
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Thompson and his team responded with a robust line of new menu items, including three variations on the Quarter Pounder, replacing the pricier Angus burger options, and better-for-you options such as Premium McWraps, Egg White Delight McMuffins and Blueberry Pomegranate Real Fruit Smoothies that the chain credited with one percent same-store sales growth in the second quarter of 2013. That was followed by a 0.9 percent increase the following quarter.
However, the September introduction of batter-fried chicken “Mighty Wings” that failed to meet sales expectations contributed to a decrease in same-store sales, and McDonald’s would face operational and image challenges as a result.
Meanwhile, a National Labor Relations Board complaint filed in December meant McDonald’s the franchisor may be considered a joint employer of its franchisees’ employees, potentially holding the corporation liable. Then a survey by Sandelman & Associates found that Chick-fil-A scored better than McDonald’s as the favorite destination for families, breaking a streak that McDonald’s had enjoyed for years. On the other side of the world, a major meat supplier for the chain in the Far East was shut down for putting expired meat back in the supply chain.
It’s enough to make any CEO throw in the proverbial towel, but Thompson hasn’t sat still through any of it. He led management shakeups in 2012 that were followed in 2013 by testing a “high density kitchen” setup that would allow for more than 30 slots of selected toppings. That enabled the burger chain to incorporate customization into its plan, which is so much in demand among consumers. Early results have been promising. As that “Create Your Taste” customization platform continues, Thompson has also made efforts to streamline a menu that expanded under his watch.
After making changes to domestic corporate structure in October, Thompson followed up with his plan for a “flatter, more nimble organization,” announcing the removal of eight menu items as of 2015.
Thompson discusses McDonald's beverage platform and outlook >>
McDonald’s isn’t yet in recovery mode from the challenging past couple of years, and Thompson continues to put new tactics and strategy in place to right the massive organization he inherited, making him unquestionably one of the most powerful — and watched — people in foodservice.
Contact Bret Thorn at [email protected].
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