For decades, McDonald's has been one of the world's most recognizable and respected brands. Today, however, while it remains recognizable, it's screwed up its PR so badly that it makes you wonder whether Ronald isn't the only clown working there.
I'm not exactly a McDonald's watcher, but the last time I can remember anybody saying anything nice about the place was when they improved the quality of their coffee. Since then (and before, too) its branding has been a steady drumbeat of the truly dreadful.
The 3 Types of Brand
Before going any further, a quick primer on brand. Big company brands consist of three interlocking elements:
- Talent. How employees perceive the experience of working there.
- Product. How consumers view the company and what it provides.
- Corporate. How the financial community views the company.
Obviously, when a product brand suffers, the corporate brand suffers as well. However, the three elements of branding interact in other ways, too.
For example, when a software company looks likely to be acquired (a corporate brand change), its customers typically stop buying until they know they'll be supported (an aspect of product brand.)
Similarly, when a factory collapses in Bangladesh and kills hundreds of workers (a talent brand disaster), clothing companies try their best to disassociate their product and corporate brands, usually with something like: "We didn't know so it's not our fault."
While brand elements have always been entwined, the availability of news on the Internet entangles them more deeply. And McDonald's is getting clobbered in all three areas:
McDonald's Talent Brand
Originally, McDonald's talent brand was the place where teenagers, retirees and housewives could earn some spare cash. Today, however, McDonald's is seen as the last resort for people who'd otherwise be on the street asking for spare change.
The company's wages have become so infamous that in 2003, "McJob" was added to Merriam-Webster's Collegiate Dictionary as the generic term for any job that pays below poverty wages.
The company's talent brand suffered even more when the company was caught recommending employees apply for food stamps and that over a four year period 2011) taxpayers provided $7 billion in public assistance to McDonald's employees.
Thing only got worse where disgruntled workers targeted the company in a series of wildcat strikes. With workers complaining of being paid less than even their paltry legal wages, McDonald's has gained an unenviable reputation as a lousy place to work.
McDonald's Product Brand
In addition to being the poster child for lousy pay and work conditions, the McDonald's product has taken repeated hits for the quality of its food.
The 2004 documentary Super Size Me, where filmmaker Morgan Spurlock only ate McDonald's food for a month, firmly positioned the company's products as a primary cause of the epidemic of obesity in the United States.
Following that, there was the revelation that McDonald's burgers contained the beef byproduct pink slime, and that the manufactured contents of Chicken McNuggets liquify and evaporate if left at room temperature.
Seen one way, McDonald's taking the heat for the entire packaged food industry and, to be fair, McDonald's has done some damage control. However, there's undeniably a widespread perception that McDonald's food bad and bad for you.
To make matters worse, since the 2001 publication of Fast Food Nation, McDonald's has been lambasted in the press for targeting ads to children and manipulating politicians in order to avoid regulation and improved working conditions.
As a result, McDonald's product brand problems are so dire that, according to the Wall Street Journal, the company has considered changing its "Lovin' It" brand tag to "Lovin' Beats Hatin'" to counter the hatred an increasing number of consumers apparently feel.
McDonald's Financial Brand
All of the above has not gone unnoticed in the financial world. Traditionally, McDonald's stock has been a "blue chip" investment. However, while the company remains profitable, it's experiencing sales declines due at least in part to bad publicity.
This decline in sales looks ominous when compared to the sharp growth in sales from competitors like Chipotle, which has a more health-oriented product brand and a compelling "we promote from within; you can earn $100k a year" talent brand.
McDonalds's CEO Don Thompson admitted in an investors call yesterday that "consumers want to personalize their meals with locally relevant ingredients...in a contemporary inviting atmosphere."
In other words, consumers would rather go to Chipotle or Panera Bread. While Thompson has promised transform the company, companies the size of McDonald's seldom, if ever, change their entire culture, which is probably the only way to implement such sweeping changes.
With this in mind, it's sobering to remember that 50 years ago, the world's largest eat-out chain was Howard Johnson's. Over time, though, the changing tastes of consumer shrunk the McDonald's of its day to a grand total of two (2) outlets.