McDonald's clearly needs to take steps to turn things around after food safety issues in Asia led to a big drop in same-store sales and is one more reason it could miss 2014 global sales forecasts. Conway G. Gittens reports.
McDonald's may need to change its tag line from "I'm Lovin It" - to "Please come back." Comparable sales in July at locations opened more than a year, down everywhere around the world except Europe, and were much weaker than anybody expected. The most pressing issue: Fix Asia. A food safety scandal involving a meat supplier in China, slamming the brakes on sales in parts of the world responsible for 10 percent of sales. David Henkes, vice president at food consulting firm Technomic: SOUNDBITE: DAVID HENKES, VICE PRESIDENT, TECHNOMIC (ENGLISH) SAYING: "Clearly in Asia they are having supply chain issues and so setting consumers' minds at ease about the safety of the beef is certainly the first step. There is a lot of menu innovations and things they can be doing to the marketing initiatives they have." But when it comes to the U.S. it's going to take more than just fancy marketing. The second and most important way to fix Mickey Ds: Go Back to Basics. SOUNDBITE: DAVID HENKES, VICE PRESIDENT, TECHNOMIC (ENGLISH) SAYING: "When you look at some of the successful burger chains right now, whether it's Five Guys or some of the other ones, what do they do best? They focus on the basics: burgers, fries, shakes, soft drinks. McDonald's has gotten really far away from that and I think that when you look at what the CEO has talked about, he's talked about getting back to the core of beef and chicken items and breakfast. If you can focus on the things they do really well and really build that consumer experience and build the value equation around that, that's really what you have to do." Just look at Wendy's, it scored well with its Pretzel Bacon Cheeseburger. Which means, McDonald's can innovate with core items, but it has to refrain from raising prices too much. And that's fix number three: Concentrate on your key customer. Analysts say menu changes are too costly and too numerous, resulting in disgruntled consumers and slow service. SOUNDBITE: DAVID HENKES, VICE PRESIDENT, TECHNOMIC (ENGLISH) SAYING: "If you look within the last day or so they've announced they got this 60-second drive thru pledge. It's taken too long to get in and out of McDonald's. Consumers have come to expect very quick service from McDonald's and I think that's one of the things that have hurt them the most." There are no quick fixes - which is why the stock is down almost four percent this year. But being the king does have some advantages - it still took in $30 billion in sales last year, providing the cash it needs to hopefully convince consumers to fall in love again.