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The 'desperate' McDonald's initiative to save its bottom line

Business

Fast-food giant McDonald’s has revealed a new initiative to chase up-market food lovers: the introduction of table service in stores across Australia.

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But according to industry experts, the global burger chain’s experiment is a “desperate attempt” to save its already declining bottom line.

McDonald’s confirmed on Wednesday the service would be implemented over the next 12 months across 75-85 per cent of its stores.

Deakin University consumer behaviour expert Michael Callaghan told The New Daily the “radical shift” was forced upon McDonald’s.

“It is a desperate attempt to retain profit margin. What was successful in the past for fast-food outlets clearly isn’t anymore,” Callaghan said.

“It is a radical shift but the cold reality is you’ve got no choice but to make money or you’re out the door.

“And much like its premium meals I think this is doomed to fail. I don’t know who this is targeting.”

At the end of 2016, McDonald’s global revenue dropped to $US24.6 billion ($A32 billion), down three per cent from its 2015 revenue.

And while McDonald’s delivered a stronger-than-expected first quarter performance in 2017 – 4.5 per cent growth – it is still trying to regain more than 500 million customers it lost since 2012.

University of Technology Sydney marketing strategy expert Dr Bruce Perrott told The New Daily this fall in profit was due to increasing competitors in its market.

Perrott said the global outfit to was being forced to “change its game” and move away from its fast-food foundations.

“It’s an interesting experiment, I think it’s because their growth is starting to slow and it needs to address and regain market share from rivals,” he said.

“But it’s kind of going backwards when everyone else is moving towards delivery, McDonald’s is catering towards eat-in customers.

“Growth has faltered despite their mass-market product having been very successful in the past.”

According to a McDonald’s spokesperson, the table service initiative has been sought out by customers.

“Customers have told us they love table delivery so we are pleased to be able to offer it to them,” McDonald’s spokesperson Skye Oxenham told The New Daily.

“We’ve already started rolling out table delivery and will continue over the coming months. Once completed the majority of our restaurants will offer table delivery to customers who are dining in, including McCafe.”

It comes the same week McDonald’s announced a partnership with UberEats.

McDonald’s had been using its own delivery service from a limited number of stores for the past three years, but pressure from customers compelled the transition, McDonald’s Australia chief operating officer Shaun Ruming said.

“We kept on getting messages from customers saying ‘Why aren’t you guys on Uber and why can’t I order it? When are you going to do that?’” Ruming told News Corp.

“The delivery market in Australia is a multi-billion dollar industry. We think that’s an important thing for us to be involved in.”

This article was first published at The New Daily.

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