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Are McDonald's Golden Arches Losing Their Luster?

Do you ever eat McDonald's? If so, chances are you aren't bragging about it to your friends. A recent report from Advertising Age shows that other McD's customers likely aren't either. Despite strong sales numbers last year, the company is experiencing a crisis of brand perception.

Make no mistake, McDonald's brand is still a global juggernaut. With more than 33,000 locations in 119 countries serving 68 million people per day, an estimated brand value of $81 billion, and an Interbrand rating of No. 6 (even beating Apple at No. 8), the McDonald's brand is one of the strongest in the world. The company's value is also growing at an impressive clip - in 2011, same store sales increased by 5.6% and the brand value increased by 23% over the year before. But according to McDonald's internal tracking systems, customer perceptions are not keeping pace with these numbers.

Insiders are saying that compared to its rivals, McDonald's is consistently ranking near the bottom when it comes to quality. The company's recent sustainability efforts, nutritional improvements, and new sourcing policies are all part of its efforts to close this gap between revenue and customer opinion.

When confronted about the issue, McDonald's Director of U.S. Communications said that although "concerned" is too strong a word, the company does see that "there is an opportunity for us to answer some of the questions that customers may have, that influencers may have, about our menu, our commitments to the community and in the areas of sustainability -- things that frankly we haven't been as vocal about ... in the past."

McDonald's customers still give it high marks for variety, affordability, convenience, and kid appeal. But the company is getting slammed when it comes to taste, quality and healthfulness - characteristics that more consumers are starting to pay real attention to when deciding what to put in their bodies and feed to their kids.

Some of McDonald's recent actions and PR initiatives stem directly from the company's attempt to improve perceptions on these fronts. Last month, McDonald's announced it would stop using "pink slime," a product made of beef scraps from the slaugherhouse floor that are treated with ammonium hydroxide and used in burger patties. Just last week, the company said that it would start working with its pork suppliers to phase out the use of gestation crates, the tiny stalls that pregnant sows are housed in, which have been the target of animal rights activists. And at the end of last year, McDonald's ended its relationship with Sparboe Farms after reports of animal cruelty and unsanitary conditions surfaced.

In January, McDonald's went down a path taken by some of it's competitors and ran a national ad campaign featuring some of its potato, lettuce and beef produces to shed some light on the source of its products. "We acknowledge that there are questions about where our food comes from," Neil Golden, McDonald's U.S. chief marketing officer, told Ad Age at the time. "I believe we've got an opportunity to accentuate that part of the story." McDonald's will have to do more than just tell a story to improve customer perceptions so that customers don't have to feel ashamed about eating there.

[Image credit: Keoni Cabral, Flickr]


Kara Scharwath is a corporate social responsibility professional, marketing consultant and Sustainable Management MBA Candidate. She is currently working as a Graduate Associate in Corporate Citizenship at the Walt Disney Company while pursuing her degree at Presidio Graduate School. Follow her on Twitter @karameredith.

Kara Scharwath

Kara is a corporate social responsibility professional and marketing consultant with expertise in consumer research and environmental science. Currently, Kara is working as a Graduate Associate on the <a href="http://corporate.disney.go.com/citizenship2010/">Corporate Citizenship</a> team at the Walt Disney Company. She is also a founding partner of <a href=http://besui.com/">BeSui Consulting</a>, a boutique marketing consulting firm specializing in consumer insights and marketing communications.

Kara graduated from Rutgers University with a B.S. in <a href="http://admissions.rutgers.edu/Academics/AcademicContent.aspx?CAMPUS=New… Policy, Institutions and Behaviors</a>. She is currently pursuing her M.B.A. in Sustainable Management from <a href'"http://www.presidioedu.org/">Presidio Graduate School</a> where she is exploring the impact investing space and working to identify new ways to increase access to capital for start-ups and social ventures. Follow her on Twitter <a href="http://twitter.com/karameredith">@karameredith</a&gt;.

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