McDonald’s store sales just took another nose-dive. Global same store sales tanked more than three percent. One investment analyst entitled his analysis of McDonald’s prospective sales growth as “That’s not ketchup…it’s blood.”
The three stated reasons for McDonald’s sales declines were: competition; the company’s own missteps, including a TV story in China showing work associates mishandling chicken; and “shifting consumer tastes.” The harsh sales reality for McDonald's and other fast food retailers is that consumers increasingly associate eating their food with being fat and unhealthy. For the millennial generation focused on being “cool with a purpose,” the eating of fast food is definitely not cool or purposeful.
Yet the fast food industry is fighting wage increases like it is a catastrophic economic event. Higher wages will undercut the dollar menu. Ironically, this may enhance fast food profits as most items on a dollar menu have thin -- if any -- profit margin. Paying a living wage of $15 per hour is only sustainable if a restaurant can win customers based on an alignment of values with value. How many fast food chains are succeeding in marketing themselves as selling healthy, tasty food at affordable prices? That question is the revenue growth challenge facing the fast food industry that is increasingly being shaped by informed customers using their smart phone apps to find healthy food served in a social environment. Maybe that is the core reason one fast food industry analysis is seeing blood and not ketchup.
Image credit: National Restaurant Association
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017