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Three years ago, the golden arches of McDonald’s were tarnishing and the stock price was skidding. Many wondered if McDonald’s could stem the slide. Some blamed the downward spiral on the low-carb craze, others held fatty foods responsible, and others said that people were just getting tired of McDonalds.
This year, on October 13th, the arches turned golden again as first half sales grew 13% and earnings per share grew by 42%! This is outstanding by anyone’s calculation!
CEO Jim Cantaluop, who unexpectedly died in April and was replaced by Charlie Bell, wisely looked at the basic operations rather than blame current trends. The “old” McDonald’s philosophy was quality, service, cleanliness, and value. Mr. Cantaluop realized the company was failing on these basics. As a result, customers were leaving. A new system was integrated that required more frequent quality checks and better management accountability.
Next, rather than growing by just building more stores, increased growth was targeted by increasing sales at existing stores. Salads were added to the menu to entice more health-conscious customers as well as to encourage more repeat visits based on the increased variety. This year, 90% of growth is expected to come from existing restaurants rather than through new building. Now, McDonald’s is the largest seller of salads in the world!
The company is test marketing a new sandwich menu and other innovative items, but the key to the turnaround was just simple execution of the business basics. In any business, large or small, when we see sales slump and profits erode, we do well to look first at how effectively we are executing our plan. Often, we just need to do the basics better rather than look for that big stroke that will get us out of trouble.
King Solomon wrote, “The lazy person is full of excuses” (Proverbs 22:13 NLT). When we fail to address basic business problems, business will likely decline. But as McDonald’s has experienced, when get back to the basics and fix what is wrong, business is sure to get back on track!
Steve Marr is the former CEO of the fourth largest import-export firm in the U.S., a company which facilitated international trade for many of the largest companies in America. Currently, Steve consults with with businesses and ministries utilizing ancient Biblical principles for success in today’s marketplace. Click here to contact Steve, or visit his website at www.businessproverbs.com.
