Example Of Why McDonalds Sales Are Falling. Article Review

MCDONALD’S restaurant is one of the typical success stories in America in relation to capitalism. The restaurant kicked off with one burger in 1948 to what it is today. Currently, the restaurant runs various outlets world over approximated to be over 35000. The fast food chain stresses on quick services and affordable menu; that has been a catalyst over years for its growth. The restaurant was built upon three things that include: high-quality service, inexpensive food, and clean services. The restaurant has had a very profitable story apart from early 2000s when it was not quite stable. Since then, the share price has plummeted from $12 in 2003 to more than $100 toward the end of year 2011. However, the profitable rich story of the restaurant giant is under threat, the sales have gone down and the analyst were hoping that as they announce their annual results on January 23rd, they will do so without hiding any details on their reduced revenues. The question many people are asking and analyst alike is what might have happened to the fast-food giant?
The problem bedeviling McDonald’s emanates firstly with operational difficulties in different outlets across the globe; Particularly in Asia where the restaurant generate close to a quarter of all global profits from its chains. The reason for this remarkable decline in sales is as a result of several health concerns the food from the outlets has been raising. Unlike before, people are becoming more health conscious especially the current generation. One of the health case happened In July last year when it was established that in China, one of the restaurant suppliers had been using out of date and polluted beef and chicken. This resulted in sharp downward sales in the country. Elsewhere, some of the customers in Japan have reported finding small pieces of plastics in their food and some cases even a tooth.
International Political interests and differences have made the matter worse. Food inspectors in Russia closed down some outlets though temporarily in what is seen as revenge for European and American sanctions. The penalties had been informed by Russia military presence and intervention in its neighboring country, Ukraine. Some Russian politicians have openly called for the chain to be forcefully closed and banned entirely from operating in the country. This local political turmoil and cross border geopolitics has affected day to day operations of MCDONALD’S in those areas thereby impacting negatively on it sales.
The restaurant also has a share of problems back at home apart from those it’s facing across borders. One of the challenges MCDONALD’S is facing at home is competition. There are other fast rising fast food chains. An example is Burger King that has been winning some market share from MCDONALD’S due to it simpler and relatively cheaper list of its services in comparison to what MCDONALD’S traditional menu offers. Other upmarket "fast-casual" restaurants like Chipotle Mexican Grill and Shake Shack are also attracting some customers away from McDonald’ which informs their fast growing status. They are offering better quality services than the popular chicken nuggets and chips offered by McDonald’s. Also, they offer a high level of customer specifications as well as table service to their customers. The kind of services MCDONALD’S doesn't traditionally offer the one giving these new fast-rising food outlets an edge it terms of competition.
Despite the challenges facing this fast food giant, there are several measures it can embrace to reverse the current situation. Specifically, it can employ two key options. It can either keenly follow competitors like Burger King and restart from the primary or reenergize and be smart enough if it’s to compete with the likes of Shake Shack. Currently, MCDONALD’S seems to be applying both strategies. It has adopted two formats where they are offering a simpler menu and another they are referring to as “Create your taste”, or simply customization whereby customers have the opportunity of customizing their burgers. Likewise, the chain seems to be diversifying its services. For instance in France (one of the few places where McDonald’s is still recording an upward sales), it has opened “McCafés” that sell Macarons, tea in china cups and saucers. They also offer narrow waitress services. In its process of reinventing itself, McDonald’s might be faced with the reality that shedding of its traditional image is not as easy as it sounds.
McDonald has been faced with even daunting crisis before but has always eventually gotten a way out. Even with the current dip in revenues, the food chain only needs to come up with viable strategies on how to win its customers back. On this, their foodstuffs need to be to the standard; meaning they should not be associated with any health risks. It can also re-look its marketing strategy in comparison to that of its competitors. Their management should also change with times rather than sticking to traditional management style. The management should study closely what is making them loose customers and what could be done to lure them back.

Work cited

C.R. "The Economist Explains: Why McDonald’s Sales Are Falling." The Economist.N.p., 14 Jan. 2015. Web. 19 Feb. 2015.