When I was younger and my parents would drive on trips to Cincinnati and to Valparaiso, McDonalds would always figure in where we stopped. Whether it was the one just north of Knoxville, TN or the one in Elizabethtown, KY, or the dozen or so Mickey Ds we stopped at during our long 2 week trip in 1981 across the Eastern US and Ontario, CN, we always used the Golden Arches as a rest and recharging stop. Partly because my sisters worked briefly at the Snellville location, but also because we knew we could rely on the quality of the food there, even though it was cheap. You always knew you could find something to eat there.
As I went off to college and moved on to adulthood, my stops to the familiar McD logo got rarer. Sure I worked at McDs main burger rival, Burger King, during HS and College days, but I also discovered that there was more to stops than just grabbing Chicken McNuggets, Fries, and a Sprite while driving the Interstate routes. When I started dating my wife, I always wanted to try new places to see what I liked and what I didn’t. McDs never figured into our date nights until after my kids were born. After my kids were born, McDs visits started up again, but was largely in rotation with BK, Wendy’s, Arby’s, Chick-Fil-A, and other “cheap restaurants”.
This year, however, McDs visits have gotten fewer and fewer… even though there are tons of Golden Arches around. And I am not the only one that has stopped going to the familiar logo. McDonalds is going through a major slump in the US. The chain that we all grew up with as kids has hit a wall. People still go there, but not in the numbers or frequency they once did. There are a number of reasons, but the upshot is this: For the first time since at least stats were tracked on McDonalds growth starting in 1970, the Golden Arches will close more stores than it will open in 2015… A shocking reality for one of the biggest property owners in the US.
So let’s look at some of the reasons for the decline of the Golden Arches:
(1) MCDONALDS ONCE TRIED TO BE A JACK OF ALL TRADES… AND WASN’T GREAT AT ANYTHING. In their attempts to get more people into McDonalds, they have tried to have all sorts of options to compete with burger rivals, chicken rivals, fresh food rivals… and they forgot the basics, which is what they were good at. They tried to be hip to adults at the expense of losing families who just wanted to get a Happy Meal for their kids or play on a playground. And they forgot about quality of food, fast service, clean stores, and cheap prices. A Big Mac meal now costs about $6 in many places, and has less quality than 20-30 years ago.
(2) COMPETITION IS FIRECE NOW. McDonalds is facing a myriad of new and old rivals chipping away at their dominance. Taco Bell and Subway is challenging with Breakfast offerings. Dunkin Donuts and Starbucks are also trying to get Breakfast Numbers away from McDonalds. Chick-Fil-A has superior service in most locations, and has a stranglehold on Chicken Sandwich offerings. Chipotle is making inroads with a new generation of customers that believe in fresh food. Five Guys and other fancier burger places are even challenging the Golden Arches’ Burger Supremacy. Burger King and Wendy’s are inputting Coca-Cola Freestyle Machines in an effort to get customers in their store. Popeye’s is winning over people with their Fried Chicken. And that doesn’t even account for Sit-Down Places that offer new food that McDonalds can’t even compete with. For me, McDonalds is sort of at the bottom of the list of places I want to go to. I’d rather go to places like Nando’s or Mission BBQ or the soon to be arriving in Maryland Steak and Shake before I would go to McDonalds. Sorry.
(3) MCDONALDS ATTEMPTS TO REINVENT THEMSELVES HAVE BEEN DISASTEROUS. In recent months, McDonalds has gotten rid of half their menu items. Gone were mid-priced Chicken Sandwiches, variations of their Quarter Pounder with Cheese Burgers, and other sandwiches that underperformed. McDonalds tried to offer a new way of ordering Value Meals that left many people confused (although I loved the idea of picking and choosing what things I wanted to have with my value meal). That lasted three months before they changed back to what they used to do for value meals. They got rid of the Dollar Menu, then brought it back. They have been schizophrenic and it has angered customers more.
(4) THERE ARE JUST TOO MANY MCDONALDS AROUND IN SOME AREAS… NOT ENOUGH IN OTHERS. Within 15 minutes of my house, there are about 10-12 McDonalds… far more than any other restaurant chain in the area. They could probably dump half of those restaurants and still turn a corporate profit. Do you really need Golden Arches of either side of Ritchie Hwy in Severna Park? Do you need 3 McDs within 5 miles along Mountain Road? Meanwhile, McDonalds are fewer in other parts of the country.
(5) MCDONALDS IS LIKE SEARS AND RADIO SHACK… IN A BAD WAY. McDonalds in the 1980s was like Radio Shack and Sears… Dominant. They were the top dogs and they acted like arrogant top dogs. They oversaturated (especially Radio Shack). Look at them now. The Radio Shacks that are left are turning into Sprint outlets. Sears may be dead in another decade. McDonalds? They probably won’t die out… yet. But more and more, McDonalds’ reputation is sinking lower and lower in the eyes of many people. McDonalds needs to change course and fast. Otherwise, maybe even the Golden Arches is not be immune to Chapter 11.
The next decade will see a reshuffling of restaurants as they try to vie for the title of most recognized US restaurant. McDonalds could figure out what they need to do to remain at/return to the top, or they could slowly descend into irrelevance while other restaurants battle for the crown. At this point, who knows. One thing is certain, however: The era of McDonalds dominance is over… and unlikely to go back to the way it once was.
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