Several factors contributed to McDonald's CEO Donald
Thompson's resignation this week in the face of a continued profit slide. Last
summer, a Shanghai reporter captured footage of allegedly contaminated and expired
meat used by its supplier, Shanghai Husi Food, a subsidiary of
Illinois-based OSI group. Video of the clandestine practices went viral and the
Shanghai Municipal Food and Drug Administration found 3,000 cases of allegedly contaminated beef cases already sold to the public as "fresh. "Banned
items reached other countries and, in Japan, McDonald's replaced chicken
nuggets and chicken fillets with tofu and fish. McDonald's Asian
Weeks later, 12 Russian McDonald's were shut down by the state consumer regulator, over alleged sanitary violations including Russia's first iconic McDonald's restaurant that opened in Pushkin Square. One hundred other McDonald's were inspected for violations and Russian regulators sought to ban some McDonald's burgers and milkshakes because of alleged food safety violations. Internationally, the regulatory pressure was viewed as capricious and political and related to the Ukraine crisis but McDonald's global stature and profits were still affected. McDonald's closed all of its outlets in Crimea, following Russia's occupation and annexation of the peninsula last spring.
The burger chain is also striking out with millennials. The number of people ages 19 to 21 in the U.S. who visit McDonald's monthly has fallen by 12.9 percent since 2011 say published sources. Business analysts say young people prefer chains where they can "customize" their food choices and prefer eating healthier foods. (No one who remembers Super Size Me and two young McDonald's CEOs dying within months of each other thinks the food is healthy.)
Millennials are also not as car based as prior generations and the number of 16 to 24-year-olds who even have a driver's license fell to 67 percent in 2011. Twelve percent of millennials are also vegetarian versus one percent of baby boomers and four percent of Gen Xers.
McDonald's owed its phenomenal success to two sociological trends in the 1950s and 1960s: car travel and the changing role of women. Car travel and the growing U.S. interstate system found people on the highway, for the first time, in need of meals. Women, for their part, were entering the workforce for the first time and found themselves in need of quick meals that did not require toiling over a hot stove all day. Banking on the trends, McDonald's grew to claim 14,000 U.S. restaurants today, serving an astonishing 27 million customers a day and pleasing Wall Street. Thanks to its billion dollar advertising budget, the food giant is perceived as people-loving, children-loving and fun.
Yet not by everyone. Today, many regard McDonald's as an unhappy place. Labor activists decry its treatment of workers. Doctors and public health experts condemn its promotion of unhealthy, fattening food to children and adults. Food and environmental activists assail its industrialization of food production. The international community deplores its protectionism and trade practices and animal activists oppose its commodification of animals.
In fact the very things people used to like about McDonald's--fast, cheap, plentiful, predictable food--have become the features that are working against it. Could McDonald's' hard times be a warning to other burger and fast food chains?