McDonald’s Declining Customer Traffic Is A Death March To The Future

 

Larry Light, Contributor, Forbes

Feb 10, 2020

 

At McDonald’s USA, the trend is scary: Guest counts have declined for years. Same-store-sales have risen but higher average check drove these numbers, not customer traffic. New items, fresh beef, price promotions, new technology, delivery, and newly designed stores have not helped McDonald’s stem its steady decline in customer traffic.

 

According to the latest fourth quarter 2019 McDonald’s report, the underlying problem of declining customer traffic is persistent. How many millions of lost customers will it take before McDonald’s really focuses on reversing this risky trend? At some point, to increase revenues relying on average check on a shrinking customer base will require the average customer to spend $20 per transaction. (As a point of reference, a contribution to Forbes.com in March 2017 indicated that McDonald’s was down a half of a billion customers. That is almost 3 years ago and the trend of lost customer traffic continues.) McDonald’s is compensating for the transaction decline by focusing on increasing average ticket price to increase revenues. The check goes up, but frequency goes down. Increasing average check is not the solution to declining frequency. Increasing average check will accelerate decline in customer count.

 

This overall declining trend in customer transactions is troubling. The Corporation states that McDonald’s cannot survive with declining customer counts. In the third quarter 2019 earnings call, this was stated by the CFO. It appears to be clear to the C-suite that one cannot build a healthy business on a shrinking customer base. But, the trend continues.

 

Increases in check prices can lull management into complacency. And, while increased prices do increase same store sales comparisons, price increases mask a problem that even the McDonald’s Corporation knows can become toxic. Price promotional deals create deal loyalty not real loyalty.

 

What is more troubling about declining customer frequency is there do not appear to be any solutions coming from Corporate. Hoping for a turnaround is not a strategy. In fact, as reported in the business press...

 

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https://www.forbes.com/sites/larrylight/2020/02/10/mcdonalds-declining-customer-traffic-is-a-death-march-to-the-future/

 

 

McDonald's branch forced to hire bouncers and ban kids over spate of violence

The burger joint in Ebbw Vale, South Wales has been forced to crackdown on younger customers after a rash of brawls at the fast food chain's restaurants around the area

 

By Ralph Blackburn, Mirror (UK) 

Feb 10, 2020

 

A McDonald's in Wales has banned children from the restaurant after a spate of violent behaviour.

 

Youngsters will not be able to scoff their Big Macs inside unless accompanied by an adult.

 

They will even have to be escorted out by bouncers after being handed their grub.

 

The burger restaurant in Ebbw Vale, South Wales, was forced to take the extreme measures after police repeatedly had to be called in.

 

The fast food franchise in the Welsh town slapped the ban on youths after 5pm, in response to an array of brawls in McDonald's across the area.

 

McDonald's said anti-social behaviour issues were affecting the wider area - not just the Ebbw Vale restaurant- and it was working with local police on measures to address it.

 

A sign by the door reads: "Due to an increase in anti-social behaviour incidents over recent weeks, between the hours of 5pm and 10pm, no groups of youths unaccompanied by an adult will be permitted to stay in the restaurant.

 

"During these times, youths will be permitted to purchase food, wait to collect and then be required to leave immediately.

 

"We are working closely with Gwent Police to address this continuing issue.

 

"We apologise for having to implement these actions but the safeguarding of our staff and other customers is of utmost importance to us."

 

Last month, at the nearby restaurant in Newport, a huge brawl erupted...

 

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https://www.mirror.co.uk/news/uk-news/mcdonalds-branch-forced-hire-bouncers-21466431