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Wednesday, April 7, 2010 as of 11:14 AM ET

The New Economy

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The New Economy: What’s Working- McDonald’s

September 22, 2010 - 10:57 AM | by: Mike Tobin

As a company, McDonald’s has never really known pain. But there was a point when the golden arches were not gobbling up dollars like the Hamburglar with a case of the munchies.  It was in the early 2000’s, McD’s posted its first quarterly loss ever and the guys in charge were not lovin’ it.

The juggernaut of drive-thru did something about it, which ultimately allowed McD’s to keep a firm grasp on the title of largest restaurant company in the world with $70 Billion in sales.  They now sit securely on top of the industry and stock holders are happy while just about every other business frets over next quarter’s numbers. Kate Macarthur with Crane’s business daily says, “McD’s is still pulling positive sales and their stock price is probably the highest if not the highest level it’s ever been.”

You may notice that your neighborhood McDonald’s has remodeled.  The cold mounted-fiberglass seats, originally designed for easy cleanup and to keep loiterers from sitting there all day making the most of a free drink refill, are out.  They are being replaced by warm leather seating.  Free WIFI is provided for customers along with wide screen televisions.  Employees walk the floor with a pot of coffee ready to warm up your cup.  It’s as if they have completely abandoned the notion of fast customer turnover, unless that’s what the customer wants.

“Our customers tell us they like the warmth of this environment,” Says Jim Johannesen Chief Operating Officer for the McDonald’s U.S. operations, “They like being able to sit on a real leather chair, they like having flexible seating arrangements, warm modern lighting, a contemporary look.”

Also, they’ve gone healthy. Maybe it’s better stated that they have healthy options. Apple dippers can be substituted for fries. Salads are an option.  McCafe competes for the Starbucks dollars with a cheaper version of the latte with fancy stuff on top of it. They even have fruit smoothies.  The same marketing machine that made Ronald McDonald a easily identifiable as Santa Claus is now hard at work telling parents they can get some food in the kids, sip a latte, check facebook and get a peek at top stories in the news, all in one stop.

That gets us to the only difficulty McDonald’s really has ever known; shaking the unhealthy image. When the food police start looking for someone to blame for America’s waistline, they always come after the guys who boxed up burgers with fries, coke and a kiddie toy then called it a happy meal. “Because of the fact that they’re selling more hamburgers than just about anybody,” says MaCarthur “they claim they’re selling more chicken than anybody, more apples than anybody, more fries than anybody, they’re going to be the obvious target.”

All the characters in McDonaldland have the option of shruggin their shoulders and asking, ‘who cares?’  They’re still selling to 27 million people every day and expanding. They’re expanding all over the world. By all over the world, I mean everywhere. They just built 35 new stores in India…burger joints in a land where the cow is sacred. There are plans to build 45 more next year.

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