Is McDonald's Finally Screwed?

September 3rd 2015

These days, McDonald's is less in the cultural zeitgeist as the trendy, democratic gathering place that it seemed to be in the 1970s and 1980s. It's not the sort of place that you would want to take a date, for example.

In light of expanded public perceptions of healthful, ethical eating, as well as widely publicized labor movements, among other things, the company and its many franchises now seem to draw more ire than praise on the day-to-day—and it's eating into the company's profit margins.

On Tuesday, McDonald's began selling breakfast items all day in an effort to boost sales at all of its 14,000-plus stores in America. According to news reports, 25 percent of the company's sales in the U.S. are from breakfast menu items. And with sales declining, the new strategy hypothesizes that an extended breakfast—which previously ended around 10:30 or 11 a.m.—will at least partially reverse falling numbers.

Before the announcement last month, the company said it had been testing all-day breakfasts at select locations since spring, cases it considered before committing to a nationwide shift, which was implemented Tuesday, NPR reported.

"This is the consumers' idea. This is what they want us to do," McDonald's USA president Mike Andres told the Wall Street Journal Tuesday. "That's why I think this could be the catalyst for our turnaround."

But an extended breakfast menu is unlikely to fix all the company's public relations gaffes in recent years.

1. Substandard Wages

With calls to raise the minimum wage from labor groups like the Fight for $15 receiving widespread media coverage recently, McDonald's—the world's largest fast food chain—has been at the forefront of the conversation over substandard wages. As ATTN: reported in May, the average wage at the restaurant is $9 per hour, and more than half of McDonald's workers are on some form of public assistance program. One University of California, Berkley study found that low-wage workers receive an estimated $127.8 billion in federal aid, and $25 billion in state aid. Responding to pressure, McDonald's announced in April that it would increase employee wages by more than 10 percent across 1,500 company-operated stores in the U.S., and phase in benefits such as paid vacation and financial assistance with education. But that may not be enough: the Washington Post notes that earlier this month, the company announced it would be shuttering 184 restaurants nationwide—a first in over 40 years.

2. Health

Although the company has tried to diversify its menu, incorporating healthier options such as salads and wraps, McDonald's seems to be both falling behind the competition, and losing its hard-won identity as it tries to change with consumers. So-called fast casual restaurants like Chipotle, of which McDonald's owned a majority stake until 2006, have captured the hearts and minds of consumers with at least the appearance of healthier food options; a study earlier this summer showed that Americans trust Chipotle more than McDonald's, the latter of which did not even make the list of most-reputable U.S. food companies. That study pairs with general trends in American consumers' eating habits, which have included, according to a 2014 Department of Agriculture study, a shift away from calories, fast food, cholesterol, and fat—not a trend necessarily conducive with eating at McDonald's.

3. Animal Abuse

In March, the company announced that it would no longer buy chicken for any of its 14,000 U.S. stores that was raised with antibiotics, addressing concern over new forms of drug-resistant bacteria. But the company still has decidedly negative associations with factory farming and animal abuse in its massive supply chain. Last week, the company announced that it had cut ties with a chicken supplier in Dukedom, Tennessee, after video footage taken by an animal rights group showed factory workers pummeling small and sick birds to death using a pole with a large spike on the end. The farm was contracted out by poultry giant Tyson Foods, which supplies chicken to McDonald's, the second biggest purchaser of poultry in the country, USA Today reported.

4. National Labor Relations Board Ruling

Recently, McDonald's was just one of many companies to be affected by a National Labor Relations Board (NLRB) decision to expand its joint employer standard, bringing the parent company one step closer to becoming a joint-employer with its franchises, and opening up direct channels for collective bargaining options for better working conditions, and higher wages between McDonald's employees and the company, ATTN: reported. Around 90 percent of McDonald's workers are employed by franchise locations, which until last week were largely held responsible for working conditions. As ATTN: noted, the NLRB ruling could "increase the amount of coordinated efforts to improve wages as workplaces." 

5. Taxpayers Subsidize Low-Wage Workers

There are substantial hidden costs to taxpayers that result in low wages for workers at places like McDonald's, who are forced to rely on public assistance programs such as Medicaid, Temporary Assistance for Needy Families, food stamps, and the Earned-Income Tax Credit to get by. The UC Berkley study mentioned earlier found that low-income jobs ultimately cost taxpayers around $127.8 billion per year at the federal level to support workers' families, and $25 billion each year at the state level. The study also found that a majority, 56 percent, of all state and federal funding on public assistance programs is spent on working families.

Correction 9/4/15 1:18 p.m.: The story was corrected to reflect that the NLRB ruling found McDonald's to be a potential joint-employer with its franchises. Whether or not the company is considered a joint-employer is still a pending decision. 

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