Fast food giant McDonald’s has been flailing as of late; a recent survey revealed that consumers lacked trust in the company compared to other fast-food chains like Chipotle, Panera Bread, and Krispy Kreme. Its financial reports have not fared much better, reporting a 10% drop in quarterly sales in July. How is McDonald’s fighting back? Here’s three ways the burger giant hopes to get the public lovin’ it again.
McDonald’s has been trying out fresher ingredients in its menu options. From pledging to use antibiotic-free chicken to rolling out the superfood du jour kale to its menu, the burger behemoth is attempting to cater to the growing demographic of health conscious people. It has also added clementines to its children’s menu in an attempt to address its role in child obesity.
In perhaps its largest move in recent years, McDonald’s announced it will be serving breakfast all day nation-wide starting October 6. After a successful pilot testing in select markets, the fast food giant hopes answering to the consumer demand for 24/7 breakfast will rebound its sales. The move is a gamble, as it will cost each franchisee an estimated $500-$5,000 to install new grills to run lunch and breakfast menus simultaneously.
Still, RBC Capital Market Analyst David Palmer estimated the move will push breakfast sales from 25% to 29%. The real question is, according to Palmer, whether McDonald’s can use breakfast to “find other things… to keep the momentum going.”
Changes to Dividends
McDonald’s has increased dividends every year since 1976, but change is on the horizon. “As we execute the initial steps of our turnaround plan, we’re actively evaluating our capital allocation decisions, including our dividend as part of our broader strategic planning process,” said CFO Kevin Ozan during a Q2 earnings call. McDonald’s may slow the rate of increase of dividends or flatten them altogether to allow more money to go toward menu and technology innovations that will enhance customer service.
How will these changes affect the burger chain’s bottom line? The proof is in the pudding – or in this case, the McGriddle.