One of the hallmarks of any company, even a lousy one, is transparency. The more details a company can provide on its operations and the more access shareholders have to management, the better. It shows that management has nothing to hide, that shareholders are partners, and it leaves little room for suspicion.
Now think about the other side. Let’s say we have a company that isn’t forthcoming. It hides information. It won’t “break out” segment information or other detail. I never like companies that do this. It makes it difficult to make calculations or to find trends.
McDonald’s (NYSE: MCD) is becoming the latter. It recently announced that it will no longer report monthly sales information. The excuse is that the company is trying to execute a long-term turnaround plan, and those monthly sales reports are just a distraction that causes stock volatility.
A lot of other retailers also engage in this obfuscation. The difference is that, while I accept it for companies that are knocking it out of the park, I don’t when a company is flailing. I didn’t like it when Starbucks (NASDAQ: SBUX) became less transparent when it was turning around in 2008, and I hated it when it made that policy permanent. But at least Starbucks is performing.
Yes, McDonald’s will still report same-store sales on a quarterly basis, but I want to see how things are going month to month. I don’t want any surprises. I want transparency.
That being said, the company is trying a few new things to enhance the McDonald’s brand. Apparently, it will sear its burgers differently to make them juicier. OK, that might be good.
It plans to speed up drive-through lanes that are side-by-side and increase order accuracy. OK, that might be good.
It also said it will stop selling chicken that is treated with antibiotics. OK, that might be good.
Happy Meal milk will no longer have artificial growth hormones. Wow. Really? Welcome to the 21st century.
There aren’t many other details. In looking over this list, I’m not impressed. McDonald’s needs an entirely new vision, not Band-Aids or cosmetic changes.
Look, I know people go to McDonald’s for fast food, but the truth is that a host of chains now deliver fast food that is delicious and healthier than McDonald’s. The company needs to figure out how to steer its menu in a healthier direction without killing its legacy products. I don’t know how they do this.
I think the company needs to look to how Burger King turned itself around and pull a few pages from that book as well. That’s going to include some expensive renovations. I’ve seen some cool McDonald’s architecture in a few places, and I think that would help. Clean up the image a bit. Hire a firm that specializes in marketing communications to craft a new narrative for McDonald’s, right down to Ronald McDonald himself.
It also needs to implement computerized service menus as soon as it can. Starting July 1, McDonald’s will raise its minimum wage for employees at its company-owned stores to at least $1 an hour more than the local minimum wage.
The U.S. is moving toward higher minimum wage and labor costs are only going to increase. McDonald’s needs put in the touchpads, and cut its labor force.
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