Business

Not lovin' it: why everything is going wrong for McDonald's

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McDonald's has resumed sales of its famed Quarter Pounder burgers in all of its US restaurants after an E. coli outbreak left at least one person dead and dozens of others ill. McDonald's originally said the beef patties could be the source of the outbreak, but the US Department of Agriculture now believes that contaminated onions were to blame. McDonald's and other chains are "yanking" raw onions from their menus, said The New York Times. Past outbreaks of E.coli have "hampered sales" at big fast food restaurants, said The Guardian, as they cause customers to "shun the affected chains". A fall in sales is never good news for a company, but it's one that McDonald's in particular can ill afford, at a time when the brand faces a feast of challenges including a decline in sales and embroilment in divisive political rows. In July, McDonald's announced that its sales had fallen by 1% worldwide across every company segment from April to June, leading to net income falling by 12% to $2 billion. It was the first decline since 2020, when the Covid pandemic forced the company to close its doors. Reporting on the sales slump, CBS News said "inflation-weary" consumers were pulling back on "eating out". Consumers have moved a "larger share of meal occasions toward grocery stores", Morningstar equity analyst Sean Dunlop told the broadcaster, meaning that McDonald's was seeing "sluggish traffic". Fast food chains "have had to focus on offering more attractive value meals", as lower-income customers "feel the pinch" from surging prices in recent years, said the BBC. Politics has also played a part in the company's woes. Pro-Palestinian activists called for a worldwide boycott after Israeli McDonald's franchises offered "thousands of free meals to soldiers in Israel's military" in Gaza in the days following the 7 October attacks, said Fortune.

McDonald's is one of many Western brands to be affected by anti-Israel boycotts in the Middle East. Sales have also fallen steeply in France. McDonald's CEO Chris Kempczinski said that France is "one of the markets that has a higher Muslim population", and suggested that the impact on sales there "has been more than maybe in other markets because of that population". The chain was also embroiled in US politics when Donald Trump served French fries from a branch in Philadelphia, "cosplaying as a minimum-wage worker", said The Guardian. The branch was "reportedly closed for normal business hours" and the customers he served for 30 minutes were "all pre-screened". The visit came after Kamala Harris' claim that she worked at McDonald’s became "one of the most unexpected talking points of the election campaign", said The Telegraph. Harris has used it to "burnish her middle-class credentials" but Republicans are "accusing her of lying". Broader cultural shifts are also leaving McDonald's struggling to stay relevant, said Kate Ng in The Independent. For one thing, "health consciousness has ramped up" among consumers – and that's tricky for a brand which for decades has been a byword for junk food. More of us are looking for "healthy" fast food, a "space that has been filled by brands like Leon and Pure". And "even if you did want something quick and dirty", there are "so many more competitors in the fast food game now". For Gen Z and Gen Alpha, "where they are seen eating" is increasingly important for social media, and a "hastily thrown together" Big Mac "just doesn't look aspirational enough" for Instagram, compared to a "fried chicken burger stacked to the high heavens".