The Squeeze: Mickey D's Salad Disaster

McDonald’s seems to constantly come under fire, sometimes for reasons which seem wholly idiotic (Szechuan Sauce, anybody?) and other times by their own pitfalls (removing fries from Happy Meals, consequently turning them into Sad Meals). Most fast food chains are mired in controversy—which is simply the nature of the beast—but a new conundrum could prove severely detrimental to the Golden Arches.

Adapting a fast food business model to yield maximum profits from picky millennials can be tricky, as more and more young adults stray away from Big Macs in lieu of healthier options. Besides a late night caviar for potheads, the slew of greasy options McDonald’s serves up doesn’t hold much worth as Mad Greens, Noodles and Company, Chipotle, etc. all gain larger niche footholds in our diets. However, burger joints took steps to adapt—in this case, the integration of salads into the McDonald’s menu in 2005. This all seemed fine and well; although salads make up less than 3% of total revenue, they work wonders for a more health conscious brand imaging. Until said salads started giving customers explosive bowel movements earlier this week. Yikes.

Chipotle had a similar outbreak in their produce, yet they were able to bounce back quickly, even growing their sales in Q1 of 2018. Who says McDonald’s can’t do the same thing? A large pillar of economics revolves around the wants of the consumer, and how they make choices when given diverse options for their dollar. Even though Chipotle dished up enough Montezuma’s Revenge to knock out a small village, they were able to rebound due to brand image. Chipotle and McDonald’s took two different routes when building their brand image during their respective conceptions; while Chip built an empire around fresh, non-GMO ingredients, Mickey D’s opted for convenience. While convenience was king in the 20th century, the holistic interest of consumers has shifted to fresh after convenience spawned large quantities of type-2 diabetes and heart problems (which I figure is kind of a big deal).

The skinny: modern consumers want fresh, McDonald’s failed miserably to adapt, thus I predict a sharp decline in market cap and diminished brand imaging in the coming months. McDonald’s isn’t going anywhere, per se, as they still generate gargantuan amounts of revenue, but until the salad crisis cleans up, I would hold off on furthering investments in $MCD.

-The Juiceman