Turnaround report: McDonald’s problems quantified; Subway’s big plans; industry image setbacks

McDonald’s is deep in it, with no lifeline: Study

Nearly half the American public says McDonald’s ambitious turnaround efforts won’t get them to visit the chain more often, though a significant portion admit they could be swayed by all-day breakfast and the removal of food additives.

An even stronger lure, survey respondents told researchers commissioned by Crain’s Chicago Business, would be the development of a next-generation value menu. More than one in three Americans—35.5 percent—said a revised roster of deals would lure them more frequently into stores.

McDonald’s has set an Oct. 6 target date for offering breakfast all day, and it’s already pledged to remove some antibiotics from the chicken it uses. The chain has been mum about a new value menu to replace its Dollar Menu and More line-up, though it has promoted one-off bargains like this summer’s $2.50 meal deal.

Still, 47.2 percent of the 610 survey respondents said those efforts wouldn’t draw them more frequently into a McDonald’s. In line with that sentiment, 48.4 percent of those canvassed say they visit the chain less often today than they did five years ago.

The reason cited most often: Concerns about the food.

Yet, as Crain’s noted, there were some strong contradictions within the data. Despite the tarring by respondents cutting back on visits, McDonald’s food was rated high overall, the paper pointed out. The participants rated McDonald’s fries as superior to anyone’s “by a wide margin,” and they rated the chain’s burgers fourth best among the sandwiches of 11 fast-food chains, Crain’s reported.

It also noted that about half the respondents had visited a McDonald’s during the past month, and the traffic was greater than the combined visits to the burger giant’s top two competitors.

The survey was conducted on behalf of Crain’s by 8Sages and Leo Shapiro.

Subway wants to jump tracks

Rumblings are emerging from several quarters of major changes in the works for Subway, whose recent misfortunes have been nothing less than biblical.

With a Siamese-twin connection to a pitchman heading to jail, the chain is rethinking its advertising. A new agency, BBDO of New York, was chosen last week, no doubt with explicit instructions to forego any spokesperson and never hum the Five-Dollar Foot Long jingle. Among the chain’s challenges is pushing beyond a price that has been just as much a part of the chain’s image as Jared Fogle long was. Costs are escalating, and customers expect a $5 price tag for a big hero.

This week, The New York Post reported that a major remolding of the brand is in the works, with the big reveal targeted for mid-2016.

Among the changes planned for the chain is a redesign of stores, uniforms and menu boards, the tabloid reported. To polish Subway’s dusty health halo, it added, vegetarian and less-processed selections are being developed.

The revamp would be the first major overhaul of the formerly high-flying brand in about seven years, and the first change of mega-significance since President Suzanne Greco took over day-to-day control of the chain from her brother, co-founder and CEO Fred DeLuca, who’s fighting cancer.

Sbarro commences a two-year re-bake

After a long run as primarily a food-court concept, Sbarro is stepping outside. The chain opened what it’s calling the first freestanding Sbarro, a pizzeria in Columbus, Ohio.  (Actually, Sbarro had run freestanding drive-thrus under the name Mama Sbarro’s when the concept was still owned by the Sbarro family.)

The break from strip-mall and shopping-center sites is part of a two-year overhaul of the brand, says Sbarro President David Karam. Restaurants will be remodeled and the menu will be recast to emphasize pizza-by-the-slice. “It’s not simply a new dining experience, but an entirely new look, feel and culture,” said CMO Anne Pritz.

The revamp follows the switch to a new logo in January and the test two years ago of a fast-casual spin-off, Cucinova Urban Italian.

Industry’s image revival hits a bump

A billboard that portrays a potential fast-food worker as a stereotypical slacker may prove a setback in the industry’s efforts to turn around its image as an employer. Ironically, it was posted by a lobbyist representing chain restaurants, and was apparently intended to stoke outrage about what quick-service employees may soon be paid.

“Who needs an education or hard work when Gov. Cuomo is raising the minimum wage to 15 dollars an hour?” reads the towering sign. It shows a young man in a T-shirt, sunglasses and a baseball cap turned backward, headphones on his head. He’s saying, “What? I get $30,000 a year with no experience or skills?”

The ad was reportedly placed by the Employment Policies Institute, one of the advocacy groups run by lobbyist, labor lawyer and former Steak and Ale executive Rick Berman, a well-known figure within the Beltway.

The spot is apparently intended to question the common sense of Gov. Cuomo’s scheme to raise the minimum wage solely for quick-service employees to $15 an hour by issuing a directive.

Berman, tagged as Dr. Evil in a segment on “60 Minutes,” is known for coming at the industry’s enemies with a knife clenched in his teeth. His methods are neither subtle nor mild-mannered, but they get attention.

And he’s kept his streak alive with this latest move, though the publicity has been far from good.


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