Bob's Gutsy Leadership Blog

McDonald’s: A Lesson in Flawed Communications

The past 2-3 years have been a nightmare for McDonald’s, the giant fast-food chain. Same store sales versus year ago have suffered consistently. Most experts attribute it to a very fundamental issue; namely, boring food.

The menu at McDonald’s contains 121 different items, up 75% versus 2004 when the company was thriving. In recent years they have simply added item after item, copying what competition was doing, without any overall theme. They have also done a lot of unsuccessful items as well. For example, they McDonald’s launched a huge effort to sell deep-fried, large chicken wings with chili-pepper coating; they called them Mighty Wings. A box of five was about $5, or $1 per wing! McDonald’s ended up with 10 million pounds of unsold Mighty’s; the coating was just too spice, and consumers balked at one chicken wing costing $1.

All of these problems have led to serious financial issues. Past twelve months profits are off -15% versus year ago. Finally the board of directors took action and a new CEO was put in place recently.

After studying the situation for a few months, the new leader announced a date when that they would be unveiling their turnaround plan. Naturally, customers and investors were expecting big ideas. The event occurred a couple of weeks ago and the CEO talked exclusively about making the company more efficient and disciplined, hopefully resulting in about $300 million of reduced expenses by the end of 2017. He basically had nothing to say about making the food more appealing. There was no discussion of what to do about the stiff competition coming from the likes of Chipotle, Mexican Grill, Shake Shack, Five Guys, etc.

The comment by a Businessweek writer was “people thought they were going to hear about a new menu and future direction; what they got was a new organization chart.” Larry Light, a former chief marketing officer at McDonald’s commented “Effective turnaround plans are customer led. I didn’t hear a speck of insight into what McDonald’s wants to be when it grows up.”

The new CEO of McDonald’s made a fundamental mistake of communications; you don’t promise something that you know you are not going to be delivering. A more frightening thought is that maybe he believes he did deliver the description of a turnaround plan!

Putting the specifics of the McDonald’s situation aside, the lesson is clear. When you are leading a group, be very careful about describing about what you are going to be delivering in the future. Think carefully if the message is clear, concise, and can’t be misinterpreted. Most importantly be fairly confident that you will be working to deliver what you are describing.

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