McDonald's Plans To Rebrand Itself As A 'Progressive Burger Company'
MELISSA BLOCK, HOST:
For most of McDonald's's 60-year history, the company has focused on selling cheap, fast food, but that's not working as well as it once did. Today, a plan for a turnaround - NPR's Yuki Noguchi reports that McDonald's executives made clear they want to recast the company as a modern and progressive burger company.
YUKI NOGUCHI, BYLINE: It was a phrase the executives at McDonald's repeated nine times during a conference call and an online video. CEO Steve Easterbrook said in order to shore up flagging sales, the company will manage established and high-growth segments differently. It will convert 3,500 stores it operates into franchises to cut costs, reformulate its food and try to engage customers using better technology.
(SOUNDBITE OF CONFERENCE CALL)
STEVE EASTERBROOK: All of these phases together will culminate in our ability to be seen as a modern, progressive burger company.
NOGUCHI: Reorganizing, he says, will enable it to react better to changing customer demands.
(SOUNDBITE OF CONFERENCE CALL)
EASTERBROOK: We will also seek to modernize and be more progressive around our social purpose in order to deepen our relationship with the communities on the issues that matter to them.
NOGUCHI: Jason Moser is a retail and restaurant analyst with The Motley Fool.
JASON MOSER: When you hear him talking about wanting to become a modern, progressive burger company, well, the big problem there is we already have a lot of those out there.
NOGUCHI: Chains like Five Guys, Shake Shack, Habit Burger and Smashburger are in this category and share things in common.
MOSER: A leaner cost structure, stores that are a bit more modern-looking, a bit more enjoyable to be in, not to mention, really, I think the ingredients and the quality of the food.
NOGUCHI: McDonald's did announce recently it plans to largely eliminate chicken raised with antibiotics from its food. That's a step in the right direction, Moser says, but the company is still behind the curve.
MOSER: McDonald's has communicated value for so long, for them to be able to pivot and start convincing consumers that the brand stands for quality, I think that's a higher hurdle to clear than maybe they think.
NOGUCHI: One key challenge is how the company can use better, more expensive ingredients without raising prices in a way that could alienate regulars who order off its budget-conscious dollar menu. R.J. Hottovy is an analyst with Morningstar.
R.J. HOTTOVY: I think that's what McDonald's has to identify and really focus in on is, you know, who they want their core customer to be.
NOGUCHI: Defining that, he says, requires taking more risks and tough choices than what the company has laid out so far. Yuki Noguchi, NPR News, Washington.
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