The Big Mac doesn’t seem to tempt the taste buds these days as the World’s largest restaurant chain struggles to grow with the demand for change. Big Mac sales are suffering as customers are becoming choosier about what they eat and the value for their money.
As sales fall for six consecutive months, McDonald’s is experiencing a plunge in profits for this quarter. The profit decline is the worse the company has seen in more than ten years. Analyst only projected a 1.9 percent drop in profits. However, U.S. sells were down by 4.6 percent and globally by 2.2 percent. Sales in Japan dropped by 12 percent in the month of November alone. This news caused the stock to drop by 3.7 percent.
The Asia, Middle East and Africa sales dropped due to the expired meat scare this past summer, where the main supplier of meats for McDonald’s was allegedly selling perished meat. This was also the cause of sales dropping in Japan. McDonald’s is currently reorganizing its U.S. operations and working to restore its reputation. The company has been struggling to overcome negative rumors about the quality of its food for quite some time now. It recently launched a transparency campaign to answer questions and hopefully regain the public’s trust.
A major reason for Big Mac sales suffering is that customer’s in the 20 to 30-year-old groups have become choosier. They are more selective in what they eat and want more choices, as well as better value for their money. Analysts say that McDonald’s is no longer leading as the most economical fast food but is competing with restaurants like Chipotle, Burger King and Taco Bell.
Although McDonald’s is working to change their menu and marketing strategy, analysts feel they may not be changing fast enough. The one-size fits all burger doesn’t work any longer. Customizing food is becoming more important, particularly for the 20 to 30-year-old groups.
The Big Mac burger chain is planning to test the market. Although it’s believed to be too expensive and time-consuming to customize burgers, McDonald’s will be testing a new program called, “Create Your Taste.” Customers will tap a touchscreen to choose items such as bread, pickles, condiments and other toppings.
McDonald’s original model of a ready-made burger is quickly losing popularity. Restaurants like Chipotle whose model focuses on quality ingredients and allows customers to choose exactly what they want served on their bowl or burritos has become more prevalent for the young consumer. Even Subway totes the options model, allowing people to pick the ingredients they prefer on a sub, which gives the consumer more control over what they choose to eat.
McDonald’s plans to test the new program next year in 2,000 of its 15,000 U.S. locations. The corporation has more than 35,000 locations in more than 100 countries. McDonald’s has been facing quite a few challenges which has caused Big Mac sales to suffer, and as customer’s become choosier, the company will need to reinvent itself in order to evolve with the demands of the consumer.
By Kelara Pumphrey
Photo By Dave White — Flickr License