Cracks begin to show in McDonald’s golden arches

McDonald’s is in a flap: it is to close 25 UK restaurants following a slump in sales, while the threat of avian flu has forced the fast-food giant to consider contingency plans.

Profit margins across Europe were down from 15.6% to 14.9% last year; the UK outlook is particularly bleak, with the corporation admitting “weak sales results”. A further 50 of its 1,200 UK restaurants are being handed over to franchisees as the US chain faces competition from sandwich bars and cafés.

Critics have lambasted the chain for suggesting it would drop chicken from the menu if bird flu arrived. A McDonald’s spokesman told a national newspaper last week: “We have a taskforce working on contingency plans for our supply chain and, although details remain confidential, it involves potentially introducing alternatives to replace chicken.”

One former fast-food marketer says the inference chicken will be off the menu is irresponsible: “If chicken is properly cooked then bird flu is not an issue,” he says. “It is quite an irresponsible position for McDonald’s to take: it fuels public uncertainty.” Chicken nuggets remain the core of its Happy Meal range, and it has relaunched the product with breast meat and less salt. “It would have a significant impact on sales if it had to pull products off the menu,” the marketer adds.

A McDonald’s spokesman says there are no immediate plans to remove chicken and that it offers a broad selection of non-poultry products already. “It is really important to say that there isn’t a problem with chicken in the UK,” he adds.

However, any public uncertainty over chicken will be a blow for the fast-food chain. Following the BSE and foot-and-mouth crises of recent years, and a rise in consumers choosing “healthier” white meat, McDonald’s has been shifting away from beef. One advertising executive says it is not “Armageddon” for fast-food chains but successive crises have rocked public confidence. “Health scares such as BSE have affected the market,” he says. During 1996, McDonald’s stopped using British beef in an attempt to pacify public concerns. “Avian flu is going to affect it now,” he adds. “The problem is that, rightly or wrongly, these restaurants are not naturally trusted in the way they were 15 years ago.”

McDonald’s has implemented menu changes and facelifts to its restaurants in an effort to halt the decline, but admits there is a way to go. An experiment to offer vegetarians a range of Quorn-based meals and healthy options failed, with 11 items axed from the Salads Plus and Breakfast menus after less than 18 months.

The advertising executive suggests Jamie Oliver’s crusade against unhealthy food has shifted general attitudes more quickly and dramatically in the UK than mainland Europe, which has naturally had an impact on companies like McDonald’s. And he adds: “McDonald’s and its competitors are hit on value by Benjys, and on innovation by Subway and Pret A Manger. People going there would previously have gone to McDonald’s.” Publicly, the chain remains stoic about its performance: “We are doing a good job against our immediate competition,” says a spokesman.

A greater emphasis on coffee, revised product changes and a hastening restaurant revamp are under way, along with the next phase of the “I’m loving it” advertising strategy, and World Cup promotions. “Have we done enough, fast enough?” asks the spokesman. “Perhaps not, but things have changed and we are responding. We need to talk more about the quality of our food and jobs, but we are sticking with changes already made and investing in our restaurants.”

Catherine Turner

Comments

    Leave a comment

    Close

    Discover even more as a subscriber

    This article is available for subscribers only.

    Sign up now for your access-all-areas pass.

    Subscribers get unlimited access to unrivalled coverage of the biggest issues in marketing and world-renowned columnists, alongside carefully curated reports and briefings from Econsultancy. Find out more.

    If you are an existing print subscriber find out how you can get access here.

    Subscribe now

    Got a question?

    Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

    If you are looking for our Jobs site, please click here

    Subscribers get unlimited access to unrivalled coverage of the biggest issues in marketing and world-renowned columnists, alongside carefully curated reports and briefings from Econsultancy. Find out more.

    If you are an existing print subscriber find out how you can get access here.

    Subscribe now