If you have been keeping an eye on McDonald’s financial reports, you have probably noticed that their once famous burgers together with fries are not as popular among their consumers as they once were. The hamburger French fries and other fast-food chain, which is the biggest in America is just barely surviving from the business brought in by their coffee and milkshakes.
A closer look at their competitors, Restaurant Brands International (RBI) however seems to be getting all the business McDonald’s is losing and more. The former, which is the holding company of the Burger King Chain of fast-food restaurants, has registered a remarkable jump in its quarterly sales.
This is following a move by the chain to serve burgers together with fries with coffee to their customers at breakfast. In the meantime, you’ll wait in line for a half hour or more in queue to get burgers plus fries from the Shake Shack restaurant near you, especially on the weekends.
By all indications, the problem with burgers together with fries is not with burgers as well as fries in general, but rather in how they are made and served to consumers.
This has not escaped the attention of the big pins up on Wall Street, where McDonald’s equity stock have begun to move rather sluggishly, even after the substantial dividend adjustment. On the other hand , RBI has seen a dramatic rise in their stock prices from the first time they were listed in the Toronto Stock Exchange, and more so after the acquisition of the Tim Horton’s coffee chain.
In like movement, Shake Shack’s stocks skyrocketed on the initial day of trading at the NYSE. In addition to burgers coupled with fries, the company serves all kinds of popular milk shakes and smoothies.
Shake Shack and RBI have a few tricks up their sleeve that McDonald’s can stand to copy and/or learn from.
At RBI for example, the Tim Horton’s coffee and Burger King Chain are run as separate entities. Burger King hence offers a narrower, more specialized menu that’s far easier to prepare and serve. At the Shake Shack, focus has been placed on the leave of customization and quality of burgers offered.
These are two lessons McDonald’s would not be hurt by learning. Their coffee unit, McCaffe’s should be run separately. This allows them to narrow down the menu of the burgers together with fries section, after which focus would be shifted to improving the essence of their burgers plus fries.
Barring that, McDonald’s should consider the option of completely altering its menu in order to capitalize on their locational advantage. This would enhance the value of the firm and hence maximize shareholders’ benefits.
It would be sad for such a chain, which has been part of the American story for over 60 years, to go down without a fight. The good thing is that there is still time to do that-all that is needed is the will and oomph to do it.