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The World's Largest Fast-Food Chain Is Floundering

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dark sky mcdonalds fast foodIn a brand-new McDonald's outlet near its headquarters in Oak Brook, Illinois, customers do not have to queue at the counter. They can go to a touch screen and build their own burger by choosing a bun, toppings and sauces from a list of more than 20 "premium" ingredients, including grilled mushrooms, guacamole and caramelised onions. Then they sit down, waiting an average of seven minutes until a server brings their burgers to their table.

The company is planning to roll out its "Create Your Taste" burgers in up to 2,000 restaurants--it is not saying where--by late 2015, and possibly in more places if they do well. McDonald's is also trying to engage with customers on social media and is working on a smartphone app, as well as testing mobile-payment systems such as Apple Pay, Softcard and Google Wallet.

All this is part of the "Experience of the Future", a plan to revive the flagging popularity of McDonald's, especially among younger consumers. "We are taking decisive action to change fundamentally the way we approach our business," says Heidi Barker, a spokeswoman.

After a successful run which lifted the firm's share price from $12 in 2003 to more than $100 at the end of 2011, McDonald's had a tricky 2013 and a much harder time last year. When it announces its annual results on January 23rd, some analysts fear it will reveal a drop in global "like-for-like" sales (ie, after stripping out the effect of opening new outlets) for the whole of 2014--the first such fall since 2002.

econ food graph

In the past year Don Thompson, the firm's relatively new boss, has had to fight fires around the world, some of them beyond his control. Sales in China fell sharply after a local meat supplier was found guilty of using expired and contaminated chicken and beef.

Some Russian outlets were temporarily closed by food inspectors, apparently in retaliation for Western sanctions against Russia over its military intervention in Ukraine.

And a strike at some American ports left Japanese McDonald's outlets short of American-grown potatoes, forcing them to ration their portions of fries. (More recently several Japanese customers have reported finding bits of plastic, and even a tooth, in their food.)

mcdonalds fries worker

However, the biggest problem has been in America--by far McDonald's largest market, where it has 14,200 of its 35,000 mostly franchised restaurants. In November its American like-for-like sales were down 4.6% on a year earlier. It had weathered the 2008-09 recession and its aftermath by attracting cash-strapped consumers looking for a cheap bite.

But more recently it has been squeezed by competition from Burger King, revitalised under the management of a private-equity firm, from other fast-food joints such as Subway and Starbucks, and from the growing popularity of slightly more upmarket "fast casual" outlets.

In response, McDonald's has expanded its menu with all manner of wraps, salads and so on. Its American menu now has almost 200 items. This strains kitchen staff and annoys franchisees, who often have to buy new equipment. It may also deter customers.

"McDonald's stands for value, consistency and convenience," says Darren Tristano at Technomic, a restaurant-industry consultant, and it needs to stay true to this. Most diners want a Big Mac or a Quarter Pounder at a good price, served quickly. And, as company executives now acknowledge, its strategy of reeling in diners with a "Dollar Menu" then trying to tempt them with pricier dishes is not working.

economist fast food map

McDonald's says it has got the message and is experimenting in some parts of America with a simpler menu: one type of Quarter Pounder with cheese rather than four; one Snack Wrap rather than three; and so on. However, this seems to run contrary to the build-your-burger strategy it is trying elsewhere, which expands the number of choices. That in turn is McDonald's response to the popularity of "better burger" chains, such as Shake Shack, which has just filed for a stockmarket flotation.

Some analysts think that McDonald's should stop trying to replicate all its rivals' offerings and go back to basics, offering a limited range of dishes at low prices, served freshly and quickly. Sara Senatore of Sanford C. Bernstein, a research outfit, notes that Burger King, having struggled against its big rival for years, has begun to do better with a simpler and cheaper version of the McDonald's menu.

For the third quarter of 2014 Burger King reported a like-for-like sales increase of 3.6% in America and Canada compared with a decrease by 3.3% of comparable sales at McDonald's. That said, sales at an average McDonald's in America are still roughly double those of an average Burger King. So the case for going back to basics remains unproven.

So far, McDonald's looks as if it is undergoing a milder version of its last crisis, in 2002-03. Then, an over-rapid expansion had damaged its reputation for good service, its menu had become bloated and customers were drifting to rivals claiming to offer healthier food. Now, once again, "McDonald's has a huge image problem in America," says John Gordon, a restaurant expert at the Pacific Management Consulting Group. This is in part because of its use of frozen "factory food" packed with preservatives.

mcdonald's food

In 2013 a story about a 14-year-old McDonald's burger that had not rotted received huge coverage. Even Mike Andres, the new boss of the company's American operations, recently asked bemused investors: "Why do we need to have preservatives in our food?" and then answered himself: "We probably don't."

McDonald's doesn't seem to be cool any more, especially among youngsters. Parents say their teenage children have been put off after seeing "Super Size Me", a documentary about surviving only on McDonald's food; and "Food, Inc", another about the corporatisation of the food industry; and by reading "Fast Food Nation: The Dark Side of the All-American Meal". It is hard to imagine the new McDonald's initiatives getting the reaction Shake Shack got when it opened its first outlet in downtown Chicago in November: for the first two weeks it had long queues of people waiting outside in the freezing cold.

A lot of the negative PR that McDonald's gets is the flipside of being the world's biggest and most famous fast-food chain. This has made it the whipping-boy of food activists, labour activists, animal-rights campaigners and those who simply dislike all things American. In America it has been the focus of a campaign for fast-food workers and others to get a minimum salary of $15 an hour and the right to unionise.

Fast Food Workers Strike_Edit

Last month the National Labour Relations Board, a federal agency, released details of 13 complaints against McDonald's and many of its franchisees for violating employees' rights to campaign for better pay and working conditions. The alleged violations relate to threats, surveillance, discrimination, reduced hours and even sackings of workers who supported the protests. McDonald's contests these charges, while arguing that it is not responsible for its franchisees' labour practices.

Not all the criticism McDonald's gets may be merited--or at least it should be shared more fairly with its peers. However, the company's troubles have begun to attract the attention of activist shareholders, who may prove somewhat harder to brush aside than labour or food activists. In November Jana Partners, an activist fund, took a stake in the firm. Then in December its shares jumped, on rumours that one of the most prominent and determined activists, Bill Ackman, intended to buy a stake and press for a shake-up.

McDonald's says it welcomes all investors and is focused on maximising value for its shareholders. Even so, Mr Thompson's new strategy needs to deliver results quickly. Mr Ackman's Pershing Square Capital has done well out of its 11% stake in Burger King, because the chain's main shareholder, 3G Capital, has pushed through a drastic cost-cutting programme and a merger with Tim Hortons, a Canadian restaurant group. "If McDonald's were run like Burger King, the stock would go up a lot," Mr Ackman mused recently. It looks like Mr Thompson may soon have to fight on another front.

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Everyone Is Freaking Out Over This New McDonald's Commercial

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McDonald's debuted a new commercial during Sunday's NFC divisional playoff game between the Dallas Cowboys and the Green Bay Packers.

Boston Strong McDonald's

Everyone was tweeting about it.

McDonalds

Set to the tune "Carry On" by the band Fun., the commercial features McDonald's signs that have shared words of encouragement, support, and thanks. 

McDonald's

The commercial also aired during Sunday night's Golden Globes, and it caught the attention of many. Some people loved it, and some hated it.

Here is the commercial in full:

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The 10 Things You Need To Know In Advertising Today

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Adidas Originals Ad Rita Ora

Good morning. Here’s everything you need to know before you head into your first meeting of the week.

1. Team Bieber says Justin Bieber is just as buff and well-endowed as he looks in the new Calvin Klein ads. A pop music website had obtained an alleged pre-Photoshop photo of the shoot, but has since apologized, removed the image and published a retraction. 

2. McDonald’s released a new brand commercial over the weekend. Not everyone is “Lovin’ It.” 

3. We’ve taken a look back at 28 times brands and celebrities completely failed on Twitter. McDonald’s, Marc Jacobs, and Kenneth Cole are all in there. 

4. News Corp’s Sunday Style Magazine has been getting slammed over a “sexist” woman-on-all-fours intern ad. The weekly Australian glossy has apologized for its “error in judgment.” 

5. Here’s what to expect from Samsung’s next smartphone launch. The company will release two variations of its next flagship phone, the Galaxy S6, at Mobile World Congress in March. 

6. There’s a new Tiffany’s ad that features a same-sex couple, MailOnline reports. It’s a first for the 178-year-old jeweler. 

7. Digiday has taken a look at what native video might mean for Twitter. The social network plans to unveil its native video product in the coming weeks, which will include ads, according to reports. 

8. Another new Twitter ad product on the way will allow marketers to buy ads within streams of tweets on other publishers’ apps and websites, according to The Wall Street Journal’s CMO Today. Twitter reportedly laid out its plans to monetize its logged-out audience to media buyers during a presentation at the Consumer Electronics Show in Las Vegas. 

9. Marsh Supermarkets plans to run beacon ads to target Apple Watch owners as soon as the product launches, Adweek reports. Marsh Supermarkets has installed beacons in all of its locations so it can ping customers that have the brand’s app installed with offers or recipe suggestions when they head inside a store.

10. Adidas has launched a star-studded ad campaign to promote its Originals range, The Drum reports. David Beckham, Pharrell Williams, and Rita Ora all feature in the #OriginalSuperstar ad.

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Burger King Has A New Tactic To Steal McDonald's Customers

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Burger King Chicken Nuggets

Burger King is going after McDonald's by offering cheaper prices. 

Beginning Monday, the fast-food chain will start selling 10-piece nuggets for $1.49, or about 15 cents each, the company said in a news release.

The new promotion is a bid to steal market share from competitors, particularly McDonald's, writes Craig Giammona at Bloomberg News. 

"They're competing aggressively with McDonald's, and they're doing it as a very low price to draw people in," Darren Tristano, executive vice president at the research firm Technomic, told Bloomberg. "The goal is to steal share from the other burger brands around them."

The company also recently offered a two-for-$5 sandwich deal. 

Burger King's promotional strategy has helped the company boost sales during an industry-wide slump. 

To help offset the discounts, Burger King raised the prices of some items. 

While McDonald's is offering a promotion on free coffee, the higher price of burgers is a turnoff for consumers. 

A double quarter pounder with cheese, fries, and a drink now totals about $7.50 at some Chicago locations, Bloomberg reports.

Rather than appealing to value-conscious customers, McDonald's is trying to emulate "better burger" chains like Shake Shack and Five Guys.

The chain is testing technology that lets customers building their own burgers by choosing a bun, toppings, cheese, and more from a touchscreen.

Customers then wait at their tables until their orders are ready. 

McDonald's is planning to roll out the new system in 2,000 restaurants by the end of this year, according to The Economist.


NOW WATCH: Scientists Have Debunked 5 Myths About Carbs

 

 

SEE ALSO: Hacks To Make Fast Food Taste Way Better

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McDonald's Slammed For Using 9/11 To Sell Burgers

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McDonalds

McDonald's is under fire for an ad that critics say exploits national tragedies to sell burgers.

The ad shows a series of McDonald's signs that reference tragedies and natural disasters such as the 9/11 terrorist attacks on the World Trade Center, the Boston Marathon bombings, and the explosion of the Columbia space shuttle.

Some of the signs also make references to wedding and birth announcements.

Critics of the ad have called it exploitative and tasteless. The Washington Post called it "tone deaf" and a "disarming minute of mushy corporate propaganda."

Others have called it inspiring and moving.  

"I thought the ad was awesome," Steve McKee, president of McKee Wallwork + Company Advertising, an ad agency based in Albuquerque, told CNN. "It's clear that all the billboards were real. It was demonstrating that McDonald's is Americana."

McDonald's says the ad, which was created by advertising agency Leo Burnett, was intended to celebrate the burger chain's history in local communities.

"The powerful Signs commercial has sparked commentary from consumers, and we’re happy to see that," a spokeswoman for McDonald's USA said in a statement. "We’ve seen some strong praise and some negative comments. We expect that, and we welcome it. We’ll continue to challenge ourselves to push boundaries in connecting with our customers."

But many critics argue that invoking tragedies in advertising is never acceptable. Here's what people are saying on Twitter.

Here's the ad.

SEE ALSO: McDonald's New Bags Are Completely Unrecognizable

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ACKMAN: McDonald's Stock Is 'Not Cheap' (MCD)

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Bill Ackman

Hedge fund titan Bill Ackman, the CEO of $18 billion Pershing Square Capital Management, made some pretty negative comments on McDonald's Wednesday on Bloomberg TV's "The Pulse." 

From Bloomberg TV (emphasis ours): 

"You know, at this point, we’re a Burger King shareholder.  Burger King I think is taking very meaningful market share away from McDonald's.  We have a lot of confidence in the Burger King management team.  So I think it’d probably be unlikely for us to be competing with ourselves.  And I think McDonald's stock is not cheap.  You know, I think the company has serious issues, but because there’s a very strong balance sheet, pays almost a 4 percent dividend yield,  I think that supports the stock price.  So I think it’s not as interesting because the dividend supports a value that I think is maybe not justified based on the current performance of the company." 

There was an unconfirmed rumor in December that Ackman might be long McDonald's stock. And around the time of the rumor, Ackman told Bloomberg TV's Stephanie Ruhle that  "if  McDonald's were run like Burger King, the stock would go up a lot." Following that comment, shares of McDonald's had its biggest one day climb in nine months.

Last year, Ackman was the best performing hedge fund manager racking up an impressive 40% return. One of his big winners was Burger King. Pershing Square last held over 38 million shares in Restaurant Brands International–the newly formed fast-food chain operator that runs Burger King and Tim Horton's. 

Ackman is known for being a mostly long-only investor who takes large activist stakes in a handful of companies. He rarely shorts companies. 

But his statement that "McDonald's stock is not cheap" is sure to stir speculation of what his next short may be.

We reported last week that it appears Ackman may have a fairly recent, unnamed short that appears to be a company with a market cap over $5 billion. Ackman told CNBC's "Squawk Box" last week that he "may be done" with public shorts following his infamous Herbalife short, though. 

Watch the full Bloomberg TV interview below (6:50 minute mark for McDonald's comment): 

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McDonald's Australian Experiment Doesn't Look Very Much Like McDonald's

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A McDonald's restaurant is pictured in Encinitas, California September 9, 2014. REUTERS/Mike Blake

SYDNEY (Reuters) - The Corner, a new cafe in Sydney's trendy inner west, looks a lot like its peers - white frontage, rustic wooden seating, potted plants on the counter, quinoa on the menu and servers wearing hemp aprons.

But look a little closer at the black name sign over the door and a visitor will see "McCafe, established 2014" scrawled in small type.

Owner McDonald's Corp's <mcd.n> is saying little about the unique cafe and a series of other "learning labs" it is opening in Australia. They include a typical McDonald's restaurant on the outskirts of Sydney that, in addition to its usual fare, offers "build your own" burgers and table service.

But market experts say they indicate McDonald's is seriously worried about tough competition from so-called fast-casual chains around the world that offer healthier food choices and more sophisticated service such as private equity-owned Nandos, Shake Shack Inc <shak.n> and local chains Grill'd and Mad Mex. The fast-casual segment is outgrowing the fast-food sector.

"McDonald's globally are going through a transition," said Rohan Miller, a business academic at Sydney University, who produces studies on the fast-food market for commercial groups.

"This is clearly a soft launch being quietly managed and I imagine there'll be some tweaking to the concept as they get more experienced."

McDonald's would only say it had no plans to roll out The Corner nationally, but acknowledged some of the foods and concepts it is trialling may be adopted elsewhere.

"While we don't have plans at this stage to roll out The Corner concept nationally, it will be used to gauge customer feedback to enhance the offering in our McCafé's around the country," Chris Grant, corporate communications manager for McDonald's Australia, said in an email. "Products and concepts that our customers love may be included in other restaurants."

Offerings at The Corner include Moroccan roast chicken breast and chipotle pulled pork and personalized salads of brown rice, lentil and eggplant. Tea and coffee orders are delivered, using crockery, direct to your table.

At the more traditionally styled Castle Hill McDonald's outlet, in the outer suburbs, "build your own" burgers are presented on wooden boards and fries in a basket. They are offered alongside menu staples such as Big Macs and Quarter Pounders.

McDonald's fries

AUSTRALIAN GUINEA PIGS

McDonald's has around 930 restaurants in Australia, from which it serves around 1.7 million customers a day - a sizeable chunk of the 23.5 million population.

The country is a perfect test bed both geographically and demographically for the outlet, experts say.

"It's got a maturing audience, it's an educated audience, it's an audience that is very conversant with cafe culture, the urbanization of food, takeaway, home delivery and it's one in which service has always been a cornerstone," said Brian Walker, director of advisory firm the Retail Doctor Group. "And because of its isolation, McDonald's are able to measure its performance."

McDonald's arch rival, Yum Brands Inc <yum.n>, is also branching out. The owner of the KFC brand has applied for a license to serve beer and cider at a Sydney store, following two pilot projects in Canada last year.

McDonald's is Australia's most popular fast-food restaurant, or Quick Service Restaurant (QSR), followed by Subway and KFC. Around 42 percent of Australians visit an outlet each month, Enhanced Media Metrics Australia says.

Still, moves toward healthier eating are slowing revenues for fast-food burger shops in Australia. Annualized growth of 1.2 percent to $4.1 billion over the five years to 2014/15 includes a 0.1 percent decline in the final year, according to business research group IBISWorld.

And globally, the fast-casual sector which includes Chipotle Mexican Grill Inc. and Panera Bread Co, is growing more rapidly, led by the United States, where sales growth of 13.2 percent in 2012 outpaced 4.6 percent for quick-service outlets, according to research and consulting firm Technomic.

 mcdonalds Hamburger

BURGER WARS

McDonald's does not break out financial results per country, but Global Media Relations Director Becca Hary said Australia was a positive contributor in November 2014.

Global sales at restaurants open at least 13 months, however, were down 3.3 percent in the third quarter, and fell 1 percent for the first nine months of 2014. Expectations for the company's fourth-quarter results, due later this month, are low.

That's a sharp contrast with Shake Shack, which earlier this month filed for an initial public offering as it plans to expand its locations beyond its New York base. Investors and analysts are bullish on its prospects, saying there is room for more fast-casual restaurants that offer higher-quality burgers, a variety of toppings and, in some cases, beer and wine.

"The changes afoot from consumers are very apparent," said Retail Doctor's Walker. "There's a growing market that doesn't want to eat in plastic chairs at plastic tables in a plastic environment."

 

(Additional reporting by Lisa Baertlein in Los Angeles; Editing by Neil Fullick)

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The Worst Things You Can Order At 15 Fast-Food Chains

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Wendy's 3/4 lb burger

It's easy to go wrong with fast food. 

We studied nutritional data from 20 restaurant chains to find the worst of the worst.

Find out which items have the most calories, fat, saturated fat, sodium, and cholesterol.

You'll want to steer clear of them if you're watching your waistline.

Here are the offenders, in order of least to most calories. 

Starbucks' Venti Egg Nog Latte

Calories: 620
Fat: 29 g
SaturatedFat: n/a 
Sodium: 300 mg
Cholesterol: n/a

Starbucks' holiday beverages are delicious, but the combination of egg nog and whole milk adds up. Opting for low-fat or skim milk will help you save a few calories.



Kentucky Fried Chicken's Pot Pie

Calories: 790
Fat: 45 g
Saturated Fat: 37 g
Sodium: 
1,970 mg
Cholesterol: 75 mg

Chicken pot pie may be comfort food, but a meal that serves one shouldn't come this close to 800 calories or have this many grams of fat.



Chick-Fil-A's Sausage Breakfast Platter

Calories: 810
Fat: 54 g
Saturated Fat: 20 g
Sodium: 1,850 mg
Cholesterol:
 385 mg

While this breakfast platter may not veer as closely to 1,000 calories as some other breakfast platters, it is still way too many calories. This meal contains roughly the recommended amount of daily fat intake, and it's just breakfast! Fortunately, there are less caloric options on Chick-Fil-A's menu.



See the rest of the story at Business Insider

The Real Reason Behind McDonald's And Burger King's Chicken Nugget War

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mcdonalds chicken mcnuggets

Burger King and McDonald's are in a battle to see who can offer the cheapest chicken nuggets.

McDonald's is selling a 50-piece box of chicken for $9.99. Burger King's deal is a 10-piece for $1.49. 

There's an important reason the fast food giants are selling chicken for half-price, writes Craig Giammona at Bloomberg Businessweek. 

"With wholesale beef prices near a record — up 40% since 2012 — McDonald’s and Burger King are hoping cheaper nuggets will help boost sales to price-sensitive diners,"he writes

Droughts have caused a worldwide beef shortage.

Traditional fast food chains have been losing millennial consumers to fast-casual chains like Chipotle and Five Guys.

Because their food isn't seen as high-quality, the fast food companies have to focus on low prices to attract diners. 

But with beef prices at near all-time highs, operators can't afford to discount Whoppers or Big Macs. 

Burger King isn't stopping at chicken nuggets. 

The brand has recently brought back its discontinued Chicken Fries and ham-and-cheese Yumbo. 

Burger King's promotional strategy has helped the company boost sales during an industry-wide slump. 

To help offset the discounts, Burger King raised the prices of some items. 

SEE ALSO: The Worst Things You Can Order At 15 Fast Food Chains

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REVEALED: Here's How McDonald's Fries Are Made

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McDonald's is giving customers an inside look at one of the factories that makes its french fries. 

The company released a video Monday starring former "MythBusters" co-host Grant Imahara, who tours a Simplot factory that makes, freezes, and ships McDonald's fries. 

The process begins with trucks unloading pounds of potatoes onto a conveyer belt at the factory.
McDonald's fries
Next, the potatoes are skinned, washed and fed into tube with high-pressure water.

McDonald's friesThe water sends the potatoes through the tube at 60 to 70 miles per hour, and shoots them through blades that slice them into the familiar fry shape.

On the other side of the blades, the fries are covered in sugar. Koko Neher, the production planner at the Simplot factory, says the sugar is to "make sure we get a consistent color no matter what time of the year it is." 

McDonald's friesThen the fries are coated in sodium acid pyrophosphate, which keeps the fries from graying after freezing, according to Neher.

Then the fries are partially cooked and flash frozen, as shown in the clip below. 

McDonald's fries
At the end of the process, the fries are packaged and sent to McDonald's restaurants around the country, where the cooking process is completed and the fries are salted.
McDonald's
Finally, the fries are ready to be served. 
McDonald's

SEE ALSO: REVEALED: Here's The Inside Of A McDonald's Hamburger Factory

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Workers Accuse A McDonald's Franchise Of Racism And Claim They Fired Staff For Being 'Too Dark'

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McDonald's

Nearly a dozen workers are suing McDonald's, alleging "rampant" racism, sexual harassment and name-calling, as well as illegal terminations.

The Civil Rights Act lawsuit alleges that more than a dozen black workers were fired simultaneously last May from three McDonald's stores in Virginia because they "didn’t fit the profile" that the company wanted at its restaurants.

The workers also claim in the suit that supervisors routinely called them derogatory names, such as "bitch,""ghetto," and "ratchet," and "inappropriately touched female employees on their legs and buttocks," sent female employees pictures of their genitalia, and solicited sexual relations from employees.

In one case, a supervisor allegedly removed her false teeth and asked to perform oral sex on male employees. In another case, a supervisor allegedly called an Hispanic employee a "dirty Mexican" and "hot Mexican."

The lawsuit names McDonald's and franchise owner Soweva Co. as defendants. It claims that Soweva set out to reduce the number of African American employees in its stores after becoming the operator of McDonald's locations in South Boston and Clarkesville toward the end of 2013. 

From the complaint:

Soweva’s owner, Michael Simon, explained to workers that "the ratio was off in each of the stores," and that he just wanted "the ratio to be equal." Soweva’s supervisors were blunt, telling employees that it was "too dark" in the restaurants, and that they were going to hire different workers because they "need to get the ghetto out of the store." Before implementing the plan, one supervisor said to the other, "now we can get rid of the niggers and the Mexicans."

Soweva proceeded to hire a large number of white employees in March 2014 and two months later, about 15 black employees were terminated, according to the complaint.

"When they asked why they were being terminated, Soweva’s owner told them that they were good workers, but they "didn’t fit the profile" of his organization," the complaint says.

A spokeswoman for McDonald's said the company has not seen the lawsuit. 

"We have not seen the lawsuit, and cannot comment on its allegations, but will review the matter carefully," the company said in an emailed statement. "McDonald’s has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values. McDonald’s and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants."

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McDonald's CEO: 'Our Business Continues To Face Meaningful Headwinds' (MCD)

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don thompson mcdonald's ceo

McDonald's reported fourth quarter earnings on Friday morning, which showed that its global same-store sales fell 0.9%, less than the 1.5% decline that was expected by analysts. 

In pre-market trade on Friday, shares of McDonald's were up about 1.5%. 

In the US, same-store sales fell 1.7% in the fourth quarter, less than the 2.1% that was expected. 

Here's a quick overview of McDonald's Q4 results:

  • Global comparable sales decrease of 0.9%, reflecting negative guest traffic in all major segments
  • Consolidated revenues decrease of 7% (1% in constant currencies)
  • Consolidated operating income decrease of 20% (15% in constant currencies), primarily due to weak operating performance in the U.S. and the impact of the supplier issue in APMEA
  • Diluted earnings per share of $1.13, a decrease of 19% (14% in constant currencies), which includes a negative impact of $0.09 per share due to the supplier issue in APMEA
  • Returned $1.8 billion to shareholders through dividends and share repurchases

In a statement, McDonald's CEO Don Thompson said, "2014 was a challenging year for McDonald's around the world. Our results declined as unforeseen events and weak operating performance pressured results in each of our geographic segments,."

McDonald's said that its capital expense budget in 2015 is set at $2 billion, the lowest level in five years.

Thompson added: "Our business continues to face meaningful headwinds ... While January comparable sales are expected to be negative and results are expected to remain pressured, particularly in the first half of the year, I am energized by the opportunities ahead for McDonald's and remain confident that we can regain our momentum and build value for shareholders over the long term." 

Read McDonald's full release here »

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McDonald's Is Reportedly Cutting These Items From The Menu

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mcdonald's crispy chicken club

McDonald's is slimming down its menu this week.

The items on the chopping block are the honey mustard Snack Wrap, chipotle BBQ Snack Wrap, bacon habanero ranch Quarter Pounder, bacon and cheese Quarter Pounder, premium chicken club sandwich and premium ranch BLT chicken sandwich, CNBC reports, based on information from an anonymous director of operations for a Midwest franchisee.

We reached out to McDonald's for confirmation and will update when we hear back.

CNBC said it confirmed the cuts with a second McDonald's location in California. 

From CNBC:

The southern-style chicken sandwich will also be axed except in some markets, the Midwest franchise executive said. Additionally, local level operators can choose to remove the buffalo ranch McChicken or grilled onion cheddar burger from the menu.

McDonald's has been criticized for adding too many items to its menu as customer service has slowed dramatically.

The menu has grown 42.4% in the past seven years, to 121 items from 85 items in 2007, according to The Wall Street Journal . 

The chain's average drive-thru wait is 3 minutes, 9.5 seconds, which is the longest average wait time in at least 15 years, according to a  study by QSR Magazine.

The menu cuts come following five straight quarters of same-store sales declines in the U.S.

Sales at U.S. restaurants open more than a year sank 1.7 percent in the most recent quarter and the company's global profit fell 21%, McDonald's reported Friday

SEE ALSO: How A Former Wall Street Trader Solved The Restaurant Industry's Biggest Problem

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McDonald's Is Overhauling Customer Service

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mcdonalds

McDonald's grappled with declining US sales in 2014. 

CEO Don Thompson told investors that customer service is one of the biggest issues facing the brand. 

"You will also see changes in our customer service models as we work to create more memorable experiences and to deliver unparalleled convenience," Thompson said in a recent conference call

Drive-thru service has slowed down as workers struggle to prepare dozens of new menu items. More consumers than ever are customizing their orders, presenting another challenge for the staff. 

McDonald's is planning on installing self-order kiosks to improve accuracy of orders, Thompson said. Panera Bread also recently installed automated ordering. 

Some restaurants will begin offering table service, and the brand will also improve its mobile ordering interface. 

McDonald's has also started redesigning some kitchens to make more room for food preparation.

The new initiatives will "simply make it easier to get McDonald's their way, whatever that might be," Thompson said.

McDonald's has been testing customizable burgers that, similar to Five Guys or Smashburger, are topped with premium ingredients and take seven minutes to make. 

mcdonald's build your own burger

One in five customer complaints are related to service, Julie Jargon at The Wall Street Journal reported in 2013. That report led to McDonald's adding a position called a "runner," a person who helps each customer get their order. 

The Wall Street Journal points out that one of the chain's biggest problems is high employee turnover. 

Because most employees make a low hourly wage, they are less likely to be loyal to the company or think twice about leaving, Jargon writes. 

SEE ALSO: Hershey's Abandoned Factory Is Now In Ruins

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McDonald's Addresses Whether It Uses Real Eggs

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McDonald's wants customers to know that it uses real eggs.

The fast-food chain has made a video showing the inside of a Michigan poultry factory where eggs are cleaned, cracked, and packaged for Egg McMuffins, McGriddles, biscuit sandwiches, and other McDonald's breakfast items. 

The video is the latest installment in a series that McDonald's has made to shed light on its cooking practices.

According to the video, eggs arrive at the factory from nearby hen houses within 24 hours of being laid.

McDonald's eggsThey are cleaned in warm soapy water, rinsed, and then examined under light to find imperfections:

McDonald's eggs gifThen they are weighed to determine whether they are large enough to be used for an Egg McMuffin, according to Harry Herbruck, the executive vice president of Herbruck Poultry Ranch, where the video was filmed. 

Smaller eggs are sent to the "break room," where they are cracked to make liquid eggs, which are used in McGriddles and biscuit sandwiches. 

McDonald's eggs gifEgg McMuffins are the only breakfast menu item containing eggs that are freshly cracked in McDonald's restaurants.

The rest of the chain's egg items, such as the scrambled eggs and egg whites, are made from liquid eggs, like the ones shown below.

McDonald's eggs gifThe folded eggs and the egg that comes in McDonald's sausage burrito are premade from liquid eggs, then flash-frozen and sent to restaurants, where the dishes are warmed before being served.

Here's a graphic from the company that explains McDonald's egg cooking practices:

McDonald's egg preparation

SEE ALSO: Everything You Ever Wanted To Know About How McDonald's Food Is Made

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Here's What To Order At McDonald's If You Want 'Real' Eggs

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McDonald's eggsNot all McDonald's breakfast sandwiches are created equal.

The chain uses a mixture of whole eggs, liquid eggs and frozen eggs in its dishes that have varying levels of additives.

The freshest item on the menu is the Egg McMuffin, which uses whole eggs that are freshly cracked and cooked in restaurants and free of additives.

The Egg White McMuffin, which uses liquid egg whites, is also free of additives.

The rest of McDonald's egg dishes are made from liquid eggs that contain additional ingredients for texture, flavor, and preservative properties.

The scrambled eggs are cooked in restaurants from liquid eggs containing sodium acid pyrophosophate, citric acid, monosodium phosphate, and nisin, according to the company.

The folded eggs — which are used in the McGriddle, bacon, egg and cheese biscuit, bagel sandwiches and other dishes — are cooked from liquid eggs in factories, then flash-frozen and sent to restaurants, where the dishes are warmed before being served. 

McDonald's eggs gifThose eggs contain sodium acid pyrophosophate, citric acid, and monosodium phosphate, for color, as well as carrageenan, modified foot starch, and soybean oil for texture. The eggs also have soy lethicin to prevent the eggs from sticking to pans while cooking. 

The sausage burrito also contains pre-made liquid eggs, which include ingredients such as nonfat milk, butter, lipolized butter oil, xantham gum, modified food starch and soybeal oil.

Here's a graphic from the company that explains McDonald's cooking practices when it comes to eggs:

McDonald's egg preparation

SEE ALSO: Everything You Ever Wanted To Know About How McDonald's Food Is Made

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McDonald's CEO Is Out

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don thompson mcdonald's

McDonald's announced that CEO Don Thompson is leaving the company.

Thompson will retire on March 1 after 25 years with the fast-food chain, McDonald's said in a statement.

Steve Easterbrook, the senior executive brand president and chief brand officer, will take Thompson's place as CEO.

McDonald's has been losing market share in the US and performance at its restaurants has been on the decline for most of Thompson's tenure.

Thompson told investors last week that the company is overhauling customer service and revamping the menu to improve business.

Thompson, 51, joined McDonald's as an engineer in 1990. He earned $9.5 million in 2013, according to Bloomberg. 

Here's the full statement from McDonald's:

OAK BROOK, IL -- (Marketwired - Jan 28, 2015) -- The Board of Directors of McDonald's Corporation (NYSE: MCD) today announced that Don Thompson will retire as President and Chief Executive Officer and as a member of the Board of Directors after nearly 25 years of service to the company, effective March 1. The Board has elected Steve Easterbrook to replace Thompson as President and CEO. Easterbrook was also elected to the Board of Directors, filling the vacancy created by Thompson.

"Steve is a strong and experienced executive who successfully led our UK and European business units and the Board is confident that he can effectively lead the Company to improved financial and operational performance," said Andrew McKenna, non-executive Chairman of the Board of Directors.

McKenna continued: "On behalf of the Board I sincerely thank Don for his valuable contributions and outstanding service throughout his career at McDonald's. We will be indebted for his passionate leadership, business acumen, dedication and system knowledge."

In announcing his retirement, Thompson said. "It's tough to say goodbye to the McFamily, but there is a time and season for everything. I am truly confident as I pass the reins over to Steve, that he will continue to move our business and brand forward."

"I am grateful to have had the opportunity to work with Don and congratulate him on his remarkable career at McDonald's," said Easterbrook. "I am honored to lead this great brand, and am committed to working with our franchisees, suppliers and employees to drive forward our strategic business priorities to better serve our customers."

Prior to this promotion, Easterbrook was Senior Executive Vice President and Chief Brand Officer, leading McDonald's efforts to elevate its marketing, advance menu innovation, and create an infrastructure for its digital initiatives. An accomplished, McDonald's veteran, Easterbrook previously served in key leadership roles across the company's global business, including president of McDonald's Europe. 

In addition, Pete Bensen, Senior Executive Vice President and Chief Financial Officer, is promoted to the newly-created role of Chief Administrative Officer. In his new position reporting to Easterbrook, Bensen will oversee a number of functions supporting the company's operations. Kevin Ozan, who currently serves as Senior Vice President and Corporate Controller, will succeed Bensen and is promoted to Executive Vice President and Chief Financial Officer. 

As CFO, Ozan will report to Bensen and will be responsible for managing the global financial organization and leading the development and execution of the company's fiscal strategies. Ozan brings broad financial experience and has held senior-level positions in the company's Finance, Investor Relations and Accounting departments with assignments in both the U.S. and European markets.

The McDonald's Board of Directors today elected Bensen and Ozan to their respective positions, which will also be effective March 1.

"McDonald's is an outstanding company with talented employees and these management changes are aimed at speeding the company's movement to its next phase of innovation and growth, said McKenna. "The Board will continue to be actively engaged with the leadership team to drive McDonald's future success throughout this transition."

McDonald's is the world's leading global foodservice retailer with over 36,000 locations serving approximately 69 million customers in over 100 countries each day. More than 80% of McDonald's restaurants worldwide are owned and operated by independent local business men and women.

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The Legacy Of McDonald's CEO Don Thompson In One Awful Chart (MCD)

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McDonald's CEO Don Thompson is out.

In a statement Wednesday night, McDonald's announced that Thompson would retire on March 1 after 25 years with the company, including the last two-plus years as CEO. 

During Thompson's tenure, same-store sales have been on a steady decline as the fast-food chain tries to keep pace with the changing pace of American consumers.

In its most recent quarter, McDonald's reported global same-store sales that were down 0.9% while US same-store sales fell by 1.7%. And for almost the entirety of Thompson's tenure, performance at McDonald's restaurants was on the decline.

Thompson said in that earnings announcement that the company "continues to face meaningful headwinds," and added that same-stores sales are also expected to be negative in January and "remain pressured" in the first half of this year. 

In the past two years, shares of McDonald's are roughly unchanged, and in after-hours trade on Wednesday the stock was up more than 2.5%.

Investors were ready for changes at McDonald's. This chart shows why:

mcd sss 1

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The New McDonald's CEO Is British — Here's Everything We Know About Him (MCD)

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Steve Easterbrook McDonalds CEO

McDonald's announced on Wednesday that Steve Easterbrook, its senior executive brand president and chief brand officer, would be replacing Don Thompson as chief executive of the ailing fast-food chain.

Easterbrook will be the company's first British CEO. (But he won't be its first non-American CEO — that was Charlie Bell of Australia.) Easterbrook grew up in Watford, UK.

In one important way, Easterbrook brings McDonald's something it really needs right now: Someone who knows McDonald's inside out but who also has experience with fast-growing, trendy, fast-food brands that offer something more special and upmarket than the traditional McDonald's fare: Easterbrook was briefly the CEO of both PizzaExpress and Wagamama, and he grew both brands.

As long as nothing goes terribly in the first year of his tenure at the top of the company, he will surely be considered for a place in one of the future Queen's Honors lists.

Here's everything we know about him:

Easterbrook, 47, attended Watford Boys Grammar School in North London. He continues to support Watford FC.

Even at a young age, he was a McDonald's fan, telling The Guardian in 2008: "Me and my mate used to go across the park, jump on the Met line to get the tube into Harrow. There was a sports shop we always used to go into, and there was a McDonald's. We used to go off with three or four quid in our pocket. That would cover our train fare, mooching around Harrow, and going to McDonald's. It was the first time I had shakes and fries."

He then studied natural sciences at Durham University in the UK. After graduating he went on to work for the professional services firm PricewaterhouseCoopers as an accountant.

In 1993 he joined McDonald's as a financial reporting manager in London. He spent 18 months at "Hamburger University," the McDonald's corporate training academy near Chicago.

He worked in various roles in operations and finance before being promoted to vice president for the UK's southern region in 2001.

steve easterbrook mcdonalds ceoIn 2006, Easterbrook became the boss of McDonald's UK, overseeing more than 1,200 outlets and an estimated £35 million marketing budget. During his time there he was credited with turning around the business in the region by introducing a sharp focus on employee training, adding healthy options to the menu, and implementing a major restaurant redesign.

We asked Richard Robinson, managing partner of the UK management consultancy Oystercatchers and former head of adult and family marketing at McDonald's between 2004 and 2006, what he thought of his former boss:

"Steve's an outstanding leader, man-manager and all-round good guy. He's passionate about both the McDonald's customer and the McDonald's crew that serve them. He leads from the front counter: This may sound corny, but Steve knows every inch of how the restaurant works, having come up through the ranks. Above all, he's someone we can all trust to always do the right thing. I'm lovin' it."

Easterbrook was promoted to become president of McDonald's Europe in 2010, responsible for 7,000 restaurants across 39 countries. He had originally been given the newly created role of global chief brand officer, but McDonald's U-turned on the decision after just two months and instead moved Easterbrook back to London to look after its European business.

Industry observers guessed at the time that it was this backtracking that led Easterbrook to leave the company in 2011 to become chief executive of the UK restaurant chain PizzaExpress. There he was charged with growing its number of outlets to about 600 from 400.

Easterbrook's tenure at the pizza restaurant, however, was short, as he left to become the boss of the noodle chain Wagamama 2012. At the time it operated 84 restaurants globally. It now has about 140.

Easterbrook returned to McDonald's in 2013, taking up the global chief brand officer role permanently at the company's headquarters in Illinois. Most recently on the marketing front, McDonald's launched a major global advertising campaign, described as a "brand transformation." Here's the TV ad:


Elsewhere, under Easterbrook's watch, McDonald's has been experimenting with more upmarket restaurants in Australia, and it has made dramatic changes to its menu in the US as the company looks to arrest a long-term decline in sales.

Beyond his brief two-year break, Easterbrook has been a McDonald's man since 1993, and the chain is counting on his knowledge of the firm and his marketing skills that helped propel the brand forward in the UK and Europe to turn around a tough period for the company. He has a mammoth task ahead of him as demonstrated by the chart below, showing McDonald's same-store sales in the US under the tenure of outgoing CEO Don Thompson:

McDonalds SSS


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The 10 Things In Advertising You Need To Know Today

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budweiser lost dog

Good morning. Here's everything you need to know from the world of advertising today.

1. McDonald's has appointed British marketer Steve Easterbrook as its new CEO. Here is everything you need to know about him.

2. NBC announced Tuesday it has sold out of all its $4.5 million Super Bowl ad slots. The broadcaster said it amounted to a "record day" for media.

3. Facebook crushed its Q4 earnings. Revenue was up 49% year over year to $3.85 billion, and the site now has 1.39 billion monthly active users. Facebook also mentioned it has hit 3 billion video views per day.

4. The Guardian has a fresh new plan to take on MailOnline and The New York Times for global digital readers. It begins with a new global responsive website, which rolled out Wednesday.

5. Meanwhile, The Guardian's publisher Guardian Media Group announced Wednesday its CEO Andrew Miller will step down in June. The board will be looking at both internal and external candidates for the role.

6. BMW's brand ambassador for the Super Bowl Katie Couric admitted on TV she actually drives an Audi. But she quickly backtracked by saying her husband has a BMW, but she's just too scared to drive it, "because it's so nice." 

7. Budweiser is hoping the cute follow-up to its "Puppy Love" ad will help it win the advertising Super Bowl again this year. The pup and the Clydesdale horses are back.

8. For all the latest Super Bowl news, we're keeping a rolling update here. Our bumper guide includes ads, teasers and details about when each spot will air.

9. Here's how Apple's new retail boss Angela Ahrendts is revamping stores. New ideas include a text message system so customers don't have to queue as long, and educational workshops.

10. This is Marissa Mayer's new reality post-Yahoo's sell-off of Alibaba. This spinoff is going to change everything for Mayer and Yahoo over the next couple years. Advertising will be ever-more important.

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