Love on the Rocks: Survey Reveals Problems, Opportunities for McD's
Consumers don't think the food is high-quality, healthy or even that tasty. The restaurants seem dated and unwelcoming. For a fast-food restaurant, it takes too long for customers to receive their orders. And even accounting for changes that McDonald's is making or considering, nearly half of Americans say they wouldn't increase their visits to restaurants operated by the nation's largest fast-food chain.
And yet: Despite its well-documented struggles over the past two years, the Oak Brook, Ill.-based giant remains by far the dominant fast-food restaurant in the country, visited more in a recent seven-day period than its next two competitors combined.
The findings come from a national survey conducted this month on behalf of Ad Age sibling Crain's Chicago Business by Chicago-based research group 8Sages and longtime pollster Leo Shapiro. The online survey polled 610 American adults between Aug. 3 and 10.
The results reveal that McDonald's problems are deep and pervasive and will not be easy to fix. But they also show that the chain retains appeal for pockets of loyalists, continues to draw far more customers than its rivals and remains deeply embedded in the everyday lives of many Americans. They also offer a bit of a silver lining: Data show the company appears to be on the right track with some of its recent initiatives, particularly its plan to introduce all-day breakfast nationwide as soon as this year and its decision to remove most antibiotics from its chicken products by 2017.
"Competitors have leaped ahead not just in food healthfulness, quality and tastiness, but also in the overall experience of ordering and dining," said Mr. Shapiro, the principal investigator. Nonetheless, he concludes, "Is McDonald's fixable? Yes. Is the fix in? It doesn't look that way yet."
Put simply, McDonald's is not meeting customers' expectations. Among the survey's key findings:
-- On a scale of 1 to 9, where 9 means "enjoyed it very much" and 1 means "did not enjoy it at all," 63.8% of respondents rate their last McDonald's visit as a 7 or higher. That's far below 79.8% of customers who ate at another fast-food restaurant. Those figures were even more dismal for those who placed orders inside the restaurant and not at a drive-through window. Just 61.0% of McDonald's customers were satisfied with those visits versus 84.6% of respondents who dined in at another fast-food outlet.
-- When asked whether they visited McDonald's more often or less compared with five years ago, more than double the number of respondents (48.4%) say they visited less, rather than more (20.4%). The biggest reason? Concerns about the food.
-- The survey asked respondents whether they would visit McDonald's more often if it made certain changes. The bad news first: 47.2% say none of the changes would make them visit more. The good news: Offering all-day breakfast, an initiative McDonald's is testing in some markets, would cause a third of Americans -- and more than half of those who dined at McDonald's most recently -- to visit more often.
-- Parsing the data further, the top reason fast-food customers would go to McDonald's more often is if the chain introduces a new value menu (36.5%), followed by all-day breakfast (34.6%) and serving meat raised without hormones and antibiotics (34.3%).
-- People still like its food. McDonald's ranked fourth among 11 competitors on having "the best burger." Among those who dined most recently at Big Mac, its burger ranked highest. It also can hold on to its crown as the best purveyor of French fries, running away with the title by a wide margin.
-- It has incredible reach, with more outlets than any other chain except Subway. Over a recent seven-day period, 31.0% of diners who visited a fast-food restaurant chose McDonald's. That's more than the two next-closest competitors, Burger King (15.4%) and Taco Bell (13.1%), combined. On top of that, nearly half of all 610 respondents had visited McDonald's at least once in the past month.
-- McDonald's is particularly strong during breakfast. Of respondents whose last fast-food meal was breakfast, 42.7% of them chose McDonald's, compared with 21.5% for Starbucks and 10.8 percent for Dunkin' Donuts.
McDonald's isn't blind to its shortcomings. Earlier this year it ousted its chief executive, Don Thompson, and replaced him with a chief with a track record of success across the Atlantic. The new CEO, Steve Easterbrook, consistently has referred to his job as a turnaround effort, one that will come slowly and in fits and starts. His oft-repeated goal is to turn McDonald's into a "modern, progressive burger company."
He still has a lot of work to do to rescue the company from its reputation as a plodding giant averse to change and, of course, a nearly two-year financial slump.
McDonald's, which was given access to the survey's highlights before publication, said in a statement that it is "in the initial phase of our turnaround." The company says it is "seeing pockets of success in the Northwest, Heartland and Boston" and is "working diligently to improve the customer experience through actions focused on value, service and menu."
"This takes time," spokeswoman Becca Hary adds. "We're making progress and continue to listen to our customers and evolve our menu to meet their changing expectations."
Analyst R.J. Hottovy of Chicago-based Morningstar says the results explain why McDonald's sales have slumped for seven consecutive quarters. While competitors have simplified their menus, introduced healthier products and updated their dining rooms, "McDonald's has been behind the curve," he says.
Jack Russo, a St. Louis-based analyst at Edward Jones, says the chain needs to improve its menu, the quality of its products and the speed of service, all while staying sharp on price. "They realize they've made some mistakes, and they have an opportunity to turn this around," he says. "When I see Burger King and Wendy's showing same-store sales growth, there's no reason McDonald's can't get back to those numbers."
More findings of the survey will be available Sept. 1 at 8Sages.com.
--Peter Frost is a reporter for Crain's Chicago Business