When Will McDonald’s Innovate?

Earlier this month McDonald's reported its steepest monthly decline in U.S. sales in more than 14 years! Take a look at this graph from The Wall Street Journal:

So McDonald's has a serious problem, as sales are declining continuously in its home market. And it's not only a U.S. issue. Their performance was down all over the world in October:

• U.S. down 1.0%
• Europe down 0.7%
• Asia/Pacific, Middle East and Africa (APMEA) down 4.2%

The cash cows of McDonald's are golden oldies. The hamburger was introduced in 1948. The Big Mac was launched nationwide in the US in 1968. The Quarter Pounder was invented in 1971 (source: wikipedia). Later of course a lot more items were added to the menu and the retail concept was continuously improved. Recently the company tried to optimize its menu and modernize customer experience, but the efforts have not shown positive results on sales.

Today's restaurant business is changing very rapidly. Just have a look at the top 10 restaurant trends in 2015.

1. Meals served with a side of bragging rights.
2. Go small or go home.
3. Traditional sit-down market shrinks.
4. Beverage boom.
5. Asia ascendant.
6. Bitter is better.
7. Customers' (healthy) choice.
8. Locavores take over.
9. Highlighting the human factor.
10. Forget Millennials – it's time for Generation Z.

Is McDonald's addressing these trends? Are their portions becoming smaller? Are they becoming really higher-quality? Are they making beverages a headlining act? Are they going Asian? Are they introducing products with bitter flavors? Are they offering dieting options? Is McDonald's serving local foods from around the corner? Do they?

Since 2001 McDonald's operates an Innovation Center in Romeoville (U.S). It focuses on better service, shortening service times, ensuring that kitchens and crew members are ready to prepare new foods and drinks, and updating the ordering process. Although they are doing a great job, I am afraid that operational excellence won't save McDonald's this time. To grow their revenues McDonald's needs innovation excellence. It's all about 'doing really different things or doing things really differently' for the world's largest chain of fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets.

Chief Executive Don Thompson said in the WSJ on December 10th that McDonald's is adding the ability to customize orders in some markets, letting customers use tablet computers to choose toppings. This option will be available next year in about 2,000 of its more than 14,000 U.S. restaurants. In my view these are only minor changes.

Big companies like Mc Donalds will only stick out their necks for real innovation if doing nothing is a bigger risk. Well, McDonald's: it's time for some drastic innovation NOW!

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