For McDonald’s Corp., it’s business as usual — and that’s the problem.
McDonald’s, which recently reported its first monthly global same-store sales decline in nine years, hasn’t introduced enough new menu items to keep U.S. customers excited.
While the company turned its sights on Starbucks Corp. in recent years in a bid to bring in new customers with McCafe beverages, Burger King Worldwide Inc. began luring business away from McDonald’s with more family-friendly foods, traditionally McDonald’s strong point.
To set about reversing the slide, on Nov. 15, Oak Brook, Ill.-based McDonald’s announced the departure of Jan Fields, a 35-year veteran who had been running the U.S. operations, and said they will push value menu items in advertising to boost sales.
Meanwhile, Burger King has been excelling at a strategy McDonald’s worked to perfect years ago, introducing a steady stream of new menu items, such as snack wraps and gingerbread sundaes for the holidays.
McDonald’s has “not had anything to talk about of substance,” said Michael Kelter, a New York-based analyst at Goldman Sachs Group Inc. “People are going elsewhere.”
Chief Executive Officer Don Thompson, who took the helm in July, is under pressure as the company’s stock has dropped 14 percent this year, compared with a 13 percent gain for the Standard & Poor’s 500 index. In October, after reporting quarterly profit that trailed analysts’ estimates, Thompson said the chain was increasing advertising for its Dollar Menu to boost sales.
“We remain focused on serving our customers and offering them a great experience every time they visit our restaurants,” Heather Oldani, a spokeswoman, said in an email.
Critics say pushing Dollar Menu items isn’t likely to turn around sales because it simply encourages people to spend less, rather than buy more, squeezing profit margins.
“First and foremost, they need to maybe tone down the Dollar Menu,” said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, S.C., which owned 22,132 shares of McDonald’s as of Sept. 30. “You can get a double cheeseburger for $1 — why do you want a Quarter Pounder for $3?”
The company’s quarterly sales drop is “not something that you expect or want, and I think management has to be clear about the steps they’re taking,” Todd said.