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Is McDonald's Losing That Lovin' Feeling?

Sales Are Soaring, but Its Brand Perception Isn't Keeping Pace

By Published on . 6

Most marketers would love to be McDonald's.

It's the world's largest fast feeder by sales. Global same-store sales rose 5.6% last year over 2010 -- its eighth consecutive year of positive same-store sales. It's rated the world's No. 6 brand by Interbrand, with a value of $35.6 billion. It's the 26th-largest advertiser in the country, with a budget of nearly $888 million for U.S. measured media, according to Kantar Media. Indeed, the GoldenArches are a global beacon of success, and the company's 33,000-plus locations in 119 countries serve 68 million people a day.

Credit: Joe Zeff Design
But something strange is happening on McDonald's soaring arches: Its brand perception isn't keeping pace with sales. According to people close to the company, its internal tracking system finds that McDonald's consistently ranks near the bottom in quality perception when compared with rivals.

The company is working to close the gap, these people said, by addressing issues related to perceptions about its food's quality, sourcing and nutritional value; sustainability practices, including suppliers' treatment of animals; service; and condition of stores.

"The future is going to be so transparent that major corporations should wear underwear that fits," said Scott Bedbury, CEO at Brandstream, who praised McDonald's move. "For any company to ignore what consumers are saying and instead take comfort in their revenue numbers is ill-advised."

Heather Oldani, McDonald's director-U.S. communications, said that though concerned is too strong a word, the company recognizes 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.

"We're actually going out there and having a dialogue ... about areas that we are making strides in, and [we] also hear feedback," Ms. Oldani said, citing the "Listening Tour" last summer and outreach to key constituencies such as moms.

Make no mistake: McDonald's does not have a bad brand image. It consistently ranks high on convenience and price in numerous studies.

According to Millward Brown, it's the fourth-most-valuable brand on the planet, with an estimated brand value of $81 billion in 2011, up 23% from 2010. Harris Interactive, which just released its 2012 Reputation Quotient study, gave McDonald's a 71.77, or "good," score.

Jeff Davis, president of Sandelman & Associates, a market-research firm specializing in food-service businesses, said that McDonald's rates high in variety, indulgence, affordability, kid appeal and convenience. But the flip side to those results is that the chain rates weak on taste, quality, healthfulness and friendliness.

A recent Sandelman study gets to the heart of the matter.

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