Anti-GMO activists and those who advocate for organic foods have a lot to be happy about regarding the recent decision by fast food retailer giant McDonalds to stop publishing its traditional monthly revenue reports. Their decision has everything to do with the fact that more Americans are now making better food choices.
As reported by Bloomberg News, McDonalds has announced it wont be publishing monthly same-store sales results in the coming days as Chief Executive Officer Steve Easterbrook works feverishly to revive revenue growth at the worlds biggest fast food chain.
For now, the company plans to release same-store sales reports for June with second-quarter earnings data, but then they will stop providing the monthly revenue reports, according to company spokeswoman Heidi Barker. In an email to Bloomberg News, Barker said results for May will be reported on June 8. The company does plan to continue providing quarterly reports of comparable-store sales.
Hiding the poor sales and the reasons behind them
As the business news wire also reported, the fast food chain has been under economic siege for some time:
McDonalds is struggling to turn around its business after 11 straight months of declining global comparable-store sales. Easterbrook, who took the helm in March, announced a turnaround plan earlier this month that includes reorganizing the companys leadership, cutting costs and returning cash to shareholders. The change in sales reporting is meant to help McDonalds focus on its longer-term performance, Easterbrook said when he announced the shift at an investor conference [recently].
The monthly reporting just lends itself to more volatility, and I think investors focus on short-term issues, Jack Russo, an analyst at Edward Jones & Co., told Bloomberg News. Its a good move. Quite honestly, its kind of long overdue.
The chains major industry competitors, such as Yum! Brands Inc., Chipotle Mexican Grill, Inc. (which recently made the decision to switch to an all-organic, no-GMO menu), and Starbucks Corp., do not provide monthly same-store sales data. For its part, Starbucks stopped reporting comparable-store sales information in the late 2000s. Howard Schultz returned as the companys CEO in 2008, and the coffee chain announced the change in reporting policy three weeks later. At the time, Schultz said the move was part of a renewed focus on customers as well as creating long-term growth and long-term value for investors.
McDonalds, which has about 36,000 restaurants worldwide, said that sales at stores that had been open for at least 13 months fell 0.6 percent in April, Bloomberg reported. Sales dropped 2.3 percent in the U.S. alone.
Younger Americans want healthier food, more choices
As The Economist explained, a major reason that sales are falling at McDonalds is because more Americans are opting for fresher menus like those offered by Chipotle Mexican Grill and Five Guys, which are known as fast-casual restaurants that offer better food, more choice and some limited waitress service.
Moreover, as The Wall Street Journal notes, the fast-food McDonalds menu is really losing ground with Millennials, many of whom are much more conscious about their health.
McDonalds isnt the only fast food restaurant chain under assault these days, and the criticism isnt just coming from anti-GMO and organic food activists. They are also under attack by progressive political policies.
For example, there is a push now to boost minimum wages paid by McDonalds and other chains to $15 an hour, far above what most business analysts believe is an acceptable wage for such a low-skilled job. As the conservative Heritage Foundation noted in a September 2014 report, the higher wages go, the more fast food prices will rise. This could result in more low-skilled and school-aged workers finding themselves out of a job altogether as restaurants replace humans with automation and technology.
The desire for fresher food, fewer calories, higher quality and better prices is working against the fast food industry these days. Those who make the changes will survive; those who fail to get on board will find themselves going out of business.