Friendlier, faster, healthier. That’s the buzz in the fast food market at present. All chains are trying to build their brands based on these parameters. Amid the growing competition to excel, it is quite interesting to see how fast food giant McDonald’s Corporation (NYSE:MCD) is faring. To be honest, the company has so far focused on growth and the result, as they say, is history. But is McDonald’s living up to the expectations of its millions of fans?
Friendliness meter
Sensing that things were amiss McDonald’s Corporation (NYSE:MCD) has recently introduced more feedback mechanisms such as e-mail ids on the packets for lodging customer grievances. Recent results compiled from all feedback channels reveal that one in every five customer complaints have to do with staff rudeness.
Speed meter
Within the $200 billion Quick Service Restaurant or QSR space, drive-throughs account for around 50%-70% of total sales. Speed is a key factor for the success of any chain. McDonald’s Corporation (NYSE:MCD) has always been quite an under performer on this parameter. But over the last six months, things have become worse as evident from customer complaints reporting “too slow” service.
McDonald’s holds the number five position when it comes to speed of service taking all of 189 seconds to serve its customers.
Health meter
Eating healthy is the order of the day as the country fights obesity, heart problems, and other perils. Recent studies by researcher GrubHub show that in the first quarter of 2013, requests for healthy takeout orders have gone up 10% over last year and by 50% over 2011.
In another study by YouGov BrandIndex, fast food chains have been measured on the basis of how healthy a fast food chain is perceived by consumers. Here, too, McDonald’s lags peers like Subway, which has the highest score as well as others.
Results
The results are quite shocking as the company lags its peers in terms of courtesy, promptness, and healthier food options. Its U.S. sales have already started waning from last year, a clear indication that immediate action is required.
Rival The Wendy’s Company (NASDAQ:WEN) has been holding the top spot for speed, and is better placed than McDonald’s in terms of friendlier behavior.
The Wendy’s Company (NASDAQ:WEN) has a service time of 130 seconds in its drive thrus. Taco Bells, which occupies the second position, is a good 20 seconds behind. According to the QSR magazine, Wendy’s has retained is leading position for the last 16 years. The company has mastered the art of optimizing its kitchen layout and assembly area to such an extent that it is able to stay much ahead of its competitors, and consistently so.
In terms of staff friendliness, behavior has been found to be very pleasant in 30.5% of its outlets. This is not exemplary for sure, but still better than McDonald’s. McDonald’s should watch out for Wendy’s as it is going great guns in terms of boosting its brand. It is restructuring operations, modernizing store layout, launching new ad campaigns, and also increasing healthier menu options.
If we leave out Subway, Panera Bread Co (NASDAQ:PNRA) is often regarded as the healthiest fast food chain. The company has chosen to keep its dough production in-house, which guarantees fresh bread for all sandwiches and other menu options. In addition, it serves antibiotic and hormone free meat to a large extent.
Panera Bread Co (NASDAQ:PNRA) had ranked as America’s healthiest fast food chain and continues to live up to that tradition. The healthy brand image is Panera’s biggest sales driver.
Wendy’s had recently overtaken Panera in terms of BrandIndex, although the latter has bounced back since then. Now two companies are going neck to neck, jointly sharing the second place for being perceived as healthy fast food chain.
What is Big Mac doing?
The company has already issued a directive to its franchisees, where management has asked them to take immediate steps to improve customer service. McDonald’s is also trying to implement a new dual ordering system across the U.S., aimed at improving customer service and speed.
Under the new system, order taking would be handled by two staff members. One would take the order and issue a slip bearing the order number. Once the order number is displayed on the screen or called out, customers would collect their trays and packets from the other side of the counter. There would a second staff or “runner”, who would help customers with their condiments, cups, etc. This would provide the person taking the order a breather and allow him/her to show better courtesy towards guests.
Meanwhile, McDonald’s has made some progress with healthier menu options with its newly introduced Chicken McWraps. This has pushed up its BrandIndex closer to Panera and Wendy’s.
What does this mean for investors?
This means that there are more upsides coming for the McDonald’s, which is already having a great run. It has recently reached its 52-week high of $103.70 on April 12. Now, if McDonald’s, through its brand building initiatives, is able to generate more sales at its U.S. restaurants, it would be a huge plus point for the stock.
The article How This Company Is Getting Friendlier, Faster, and Healthier originally appeared on Fool.com and is written by Eshna De.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
