On December 8th, 2014, The Sustainable Investor examined McDonald’s pursuit of sustainable beef.
“Suffice to say, beef has treated the company’s bottom line quite nicely. Yet, on January 7th (of 2014), the world’s largest hamburger chain (nearly 70 million customers per day) announced it would begin purchasing sustainable beef in 2016. ‘Our vision is to buy verifiable, sustainable beef in the future for all of our beef. It’s a small part risk management and a large part about growing our business by making a positive business for society’ – Bob Langert, VP Global Sustainability, McDonald’s. You’re probably wondering what sustainable beef means. Good question. In fact, it’s a question McDonald’s has yet to answer.” – The Sustainable Investor, 12-08-2014
Fast-forward to present day.
Has the world stopped Loving It?
McDonald’s Corp. (MCD), albeit on a resolute quest for sustainable beef, has had a rocky year. In fact, rocky might be an understatement. McDonald’s has failed to experience any growth in U.S. sales for over 12 months.
Due to rapidly changing eating habits, McDonald’s is no longer losing customers to the likes of Burger King and Wendy’s, but rather Chipotle and Panera Bread, “healthier” fast food options. Is a Chipotle burrito healthier than a McDonald’s salad? Probably not. But would you rather walk down the street carrying a McDonald’s bag or a Chipotle’s bag? In a world where The Cool Factor has become ever relevant, and healthy eating garners a superior image, Chipotle wins 9 times out of 10.
MCD reported a 2.2% plummet in global comparable sales in November, representing the sixth straight month of global decline. MCD will report year-end results in just about two weeks time…and it doesn’t look good. The company has relayed an expectation of top-line contraction and continued supplier issues in China and Japan.
McDonald’s is scrambling to improve financial performance; the company recently laid off 63 employees at company headquarters in Oak Brook, IL. Sounds like an insignificant number? 63 is only the beginning of an expected layoff of 600 employees in the coming months. The company has also launched a “Create Your Taste” campaign, allowing customers to customize their orders. Too bad what consumers are really looking for is a healthier, more sustainable, option.
McDonald’s 440,000 employees operate 35,400+ franchises in more than 100 countries around the globe. The company has been a staple of American culture, renowned as the world’s number one fast-food restaurant. Does McDonald’s need to ditch its cheap low-quality reputation? Is this even feasible? We’re talking about altering six decades of brand image.
For the sake of our favorite golden arches, McDonald’s better find that sustainable beef soon.
In Other News…
McDonald’s Venezuela has just announced the inconceivable: the country’s 100 franchises have run out of french fries. Yes, you read that correctly. Venezuelan McDonald’s-goers are being forced to succumb to yucca fries and corn pancakes.
What’s the issue? Aside from some economic turmoil in Venezuela, the real problem actually stems from the United States. Western U.S. port congestion, and a labor union dispute to go with it, is causing a drastic slowdown. In fact, the slowdown is an issue expanding beyond french fries. Retailers have been struggling to get merchandise to stores. “The slowdown in the West Coast ports has been a much bigger deal than people think. I suspect you’re going to hear a lot more about it in January, when the retailers start putting their results out.” – Fred Smith, Chief Executive, FedEx
Whether it’s a longing for salty fries or an overall bitterness towards U.S. capitalism, Venezuela does not seem pleased with the french fry shortage. This past Tuesday, just hours after The Associated Press announced that McDonald’s had run out of fries in Venezuelan franchises, teleSUR, a state sponsored network, posted a story headlined: “McDonald’s Joins Economic War against Venezuela.”
Yet, somewhat paradoxically, while some Venezuelans are angrily awaiting the return of the french fry, others are thrilled. A government official named Dante Rivas recently posted to Twitter a photo of an overweight man eating McDonald’s burgers. Accompanying the picture was the following text: “I welcome the turbulence. Now we will eat fried yucca, 100% made in Venezuela.”