As it continues to lose market share to fast-casual chains and coffee shops, McDonald’s is in ever greater need of a McMiracle.
For a while it looked like maybe that miracle would be all-day breakfast, which has proven to be a hit in the U.S., and is now being tried out in Canada.
But Egg McMuffins for dinner may not be enough. On Monday, the company reported a 1.8-per-cent sales decline in established U.S. locations in the last quarter of 2016.
As some observers have noted, McDonald’s isn’t getting as large a boost as other fast food chains have gotten with their new fast food products.
Turning around the fast food giant’s long decline may take more changes in menu schedules. According to the company’s own internal research, reported on by Bloomberg, only one-fifth of millennials has ever tried a Big Mac. That’s a clear sign that tastes in fast food are changing, and McDonald’s hasn’t been keeping up.
"We're on the right path as we pursue our goal of being recognized by our customers as the modern, progressive burger company."
— McDonald's CEO Steve Easterbrook
These days, it’s not for lack of effort. The company announced last week two new versions of its iconic Big Mac: the Mac Jr., a small version of the sandwich with two instead of the usual three layers of bread; and the Grand Mac, an extra-large version.
Besides expanding menu options, the company has been working to appeal to a younger generation that research shows is more health-conscious and ethically focused.
“I am confident that we're on the right path as we pursue our goal of being recognized by our customers as the modern, progressive burger company," McDonald’s CEO Steve Easterbrook said in a statement accompanying the latest earnings.
That has some observers saying the company's business could suffer in Canada.
For 2016 as a whole, the company’s currency-adjusted global revenue fell 3 per cent, to $6.03 billion, though that’s still a little better than analysts had expected. And efficiencies helped it squeeze out more profit: Earnings rose 10 per cent to $1.44 per share for the year.
So far, analysts are sounding positive about the new Big Macs. David Palmer of RBC Capital Markets said he expects U.S. sales to grow this year, thanks to the increased variety of menu options, and thanks to the chain’s value menu.
The new Big Macs are “a smart idea, because customers keep saying they want more choices, especially in portion size,” NPD Group restaurant industry analyst Bonnie Riggs told Bloomberg. “If this works, it’ll have a lot of implications for what McDonald’s may try in the future.”
— With a file from The Associated Press
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