"Until they can [change that view], they're going to have a hard
time exponentially growing," the executive said.
McDonald's has also been plugging away with U.S. store remodels,
which have a more contemporary look and feel. Many locations are
installing TVs and lounge areas to bring more customers inside;
drive-thru is estimated at more than two-thirds of the chain's U.S.
business. Some have also expanded hours to capture the late-night
"For a market leader, they've been really aggressive in a pretty
fundamental way, but at the same time not losing the core of who
McDonald's is ," said Kevin Lane Keller, professor of marketing at
the Tuck School of Business at Dartmouth College.
Some of its recent marketing and PR initiatives make it clear
that McDonald's is trying to improve perceptions on key fronts --
such as the origins and quality of the food it serves, that a
"McJob" puts a worker on a dead-end track or that Happy Meals are
bad for kids.
In April, the company sought to add 50,000 employees to its
already 600,000-strong U.S. workforce on what it called National
Hiring Day. The event was created by Citizen2, an agency whose
"approach is based on strategy that is oriented to managing and
shaping public opinion," according to its website.
And in July, responding to groups concerned about childhood
obesity, McDonald's announced a revamp of the Happy Meal, with
fewer fries and more fruit, among other changes.
McDonald's has long been in the hot seat about kids, pressured
to stop marketing to them and even to jettison Ronald McDonald.
(Publicis Groupe 's Leo Burnett handles Happy Meal
marketing.) The chain has repeatedly stood by its clown.
At the annual shareholder meeting last year, CEO Jim Skinner
said that the mascot was "an ambassador for good," referring to the
Ronald McDonald House Charities.
In January, it started a national campaign created by Omnicom's
DDB, Chicago, highlighting suppliers.
The ads feature potato, lettuce and beef producers to show
consumers some of McDonald's food sources.
"We acknowledge that there are questions about where our food
comes from," Neil Golden, McDonald's U.S. chief marketing officer,
told Ad Age at the time. "I believe we've got an opportunity to
accentuate that part of the story."
"This is a journey," said Ms. Oldani. "I would equate the
suppliers' story as maybe the first chapter of that story, and we
know that there are other chapters to come [that we] need to
continue to share and get feedback on."
McDonald's also said last week that it was working with
suppliers to phase out the use of gestation crates, roughly 2-by
-7-foot crates that house pregnant sows. This came after the chain
confirmed several weeks ago that it had discontinued using
so-called pink slime -- beef scraps treated with ammonium hydroxide
and put in burger patties.
Late last year, McDonald's dumped one of its suppliers, Sparboe
Farms, after reports of unsanitary conditions and animal
Ms. Oldani said that while some of its moves have been
characterized as reactionary, the company has had relationships
with nongovernmental organizations -- including the World Wildlife
Fund, Japan Ministry of Environment and the Sustainable Agriculture
Initiative -- for 20 years.
Larry Light, president-CEO at Arcature, former McDonald's global
CMO and the brain behind the "I'm Lovin' It" campaign, said all
companies have "many drivers of trust," including whether the
consumer experience has been consistent and whether the brand has
met expectations. Integrity is important with any company, and how
it treats customers, employees, animals and the environment is a
part of that equation, he added.
McDonald's has come a long way back from a low point in the
"90s, when it struggled with operational problems, from food
quality to store cleanliness. Industry experts say that it was
overly focused on expanding its footprint quickly and that
employees were not properly trained. It had also lost its marketing
message. The chain slashed jobs and closed underperforming
McDonald's brought in Jim Cantalupo and Charlie Bell to lead a
turnaround. Mr. Light led the marketing revamp and is widely
credited with transforming the way the company goes to market.
After two years of overhaul, McDonald's was named Ad Age 's
Marketer of the Year for 2004. The stock hit an all-time high of
$102 in January, up from $12 in March 2003.
But as long as it sits on top of the category, McDonald's
carries the burden of leadership.
"I don't care whether your name is Walmart Stores or
McDonald's, the bigger targets attract the attention," said Gary
Stibel, founder-CEO of New England Consulting Group. McDonald's has
improved its image from "five or six years ago," in part because of
menu revisions and value price points, he said. But some of the
negative attention was deserved, he added, such as that surrounding