Those who don’t bend, will break.
McDonald’s has been making headlines over the past few years for two reasons: The company refused (until recently) to pay their employees livable wages, and it also takes a lot of heat for serving over-processed, low-quality caloric nightmares which have caused thousands of Americans severe health and weight issues.
Now, the corporation has made headlines again after they announced that several hundred stores will be closing over the next year because of rapid declines in sales. In fact, they have already closed 350 stores without warning, and plan on shuttering another 350 in the coming months.
McDonald’s reported an 11 percent decline in sales and a 30 percent decline in profits in the first three months of this fiscal year, and are pruning their lower performing stores across the United States, Japan, and China in order to direct more attention to their 32,500 other locations across the globe.
The chart below (from March) shows an unprecedented drop in sales growth both globally and in the US. The new data says sales growth continues to decline.
Currently the franchise is having trouble in Europe’s touchy economy and is reeling after food safety scares in Asia. In the United States, the Chipotle franchise is eating into their sales profit.
The chain is also in trouble after Nation’s Restaurant News published a survey based on 10 markers such as food quality and customer service which rated 111 limited service restaurants. McDonald’s came in at number 110 out of 111 restaurants surveyed, ranking only above Chuck E. Cheese. The In ‘N’ Out Burger franchise ranked at number one; the chain is also known for paying a higher than minimum wage to its employees compared to their competitors, so there is something to be said for the parallel between happier, well-paid employees and a quality product.
The CFO, Kevin Ozan, also told analysts that McDonald’s is still smarting from raising wages 10 percent for nearly 90,000 employees earlier this year amid the profit declines. Perhaps though, the franchise should have raised wages when the company was in its prime instead of taking advantage of employee’s labor and then pissing off the entire nation with their poor business practices, crappy food and lobbying to keep from providing health care benefits or any sort of paid time off to employees.
McDonald’s also devalued their product with their “Dollar Menu,” which was sure to drive down profits. Now, they’re looking to reintroduce a “quality” $5 burger to make up for their losses, but a few years back when they rolled out a similar $5 burger, the product was too expensive for their average customer base and didn’t do well. In fact they pandered to low-income families for years with their cheap “food,” so it’s no wonder they can’t convince a more affluent crowd to try their better burgers after driving them all away with their unhealthy menu and low-grade beef.
It seems this company is starting to flounder — and I personally couldn’t be happier about it. After years of push back from the execs to treat their employees better causing strikes and protests of the fast food chain, along with Morgan Spurlock’s documentary “Supersize Me,” which opened the country’s eyes to the dangers of consuming McDonald’s food, the company has continually in the company missed the boat to revamp their menu to give healthier alternatives and offer more benefits to managers and employees. As a whole, the company has been experiencing profit loss and low sales for years, every quarter of every year, shows loss in the stock market and continues to fall, and they never seem to get with the program.