McDonald’s Corporation (NYSE:MCD) is losing Millennials to competitors like Chipotle Mexican Grill, Inc. (NYSE:CMG) according to a recent report in The Wall Street Journal, and according to analysts on Bloomberg today, the fast-food chain may be wiser to simply concede that market to their rivals, rather than continuing to diversify into something they are not.
“Well, I think it’s been; a Millennial problem has been the start of it, and they’ve been trying to spin their wheels to keep creating new products to try and solve the problem, and that’s created its own set of problems because they’ve been very inefficient within the stores,” J.P Eggers, professor of management at NYU’s Stern School of Business said.
Restaurant analyst Stephen Anderson agrees, believing McDonald’s Corporation (NYSE:MCD) is suffering from poorer execution today than it was even five years ago, and that the company needs to get back to the basics of cleanliness, speed, and efficiency that were their hallmarks.
That was a common refrain among the panelists, who believe that McDonald’s Corporation (NYSE:MCD)’s is doing too much and stretching themselves too thin in an effort to appeal to too many people, at the expense of what made them popular in the first place and appealing to their core customers. It began with trying to offer healthier food choices amid the general backlash against the fast-food industry at the dawn of the obesity epidemic, and continued from there, to the point that McDonald’s Corporation (NYSE:MCD)’s now offers over 150 items on their menu, compared to just 9 back in the 1950’s.
Not only is McDonald’s Corporation (NYSE:MCD) facing a fight for Millennials, the breakfast space they currently dominate is about to get more contentious with the merger today of Tim Hortons Inc. (USA) (NYSE:THI) and Burger King Worldwide Inc (NYSE:BKW), which now creates the third largest fast-food chain in the world. With Tim Hortons, which has a strong focus on breakfast, now expected to greatly expand its number of outlets in the U.S, Anderson believes McDonald’s should worry more about continuing their excellence in the breakfast space, and focusing on their core customers, than worry about appealing to Millennials.
The Millennium Management fund (coincidentally enough), headed by Israel Englander is one of the most prominent shareholders in McDonald’s, with just over 900,000 shares.
Disclosure: none
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