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McDonald's and Coca-Cola's Earnings Drop as American Taste Buds Change

Burger chain considers organic, regional menu

McDonald's and Coke go back to the drawing board. Photo: Getty Images

Americans are losing their appetites for Big Macs chased down by Cokes, forcing two megabrands to re-think how to gain market share.

This week McDonald's reported a 3.3 percent quarterly profit decline, marking its worst performance in years, while Coke's profit dropped 14 percent with a continuing decline in North American sales during the same period.

What's going on? That's the question on the minds of those running both companies who are under pressure to turn things around fast.

McDonald's execs might take a cue from rival Chipotle Mexican Grill, which posted 20 percent growth in the third quarter. Chipotle restaurants feature a Fresh Mex menu that offers customers a choice of ingredients to customize their orders as well as organic beans and tofu in its Sofritas for vegans.

McDonald's CEO Don Thompson told Bloomberg the world's biggest fast food chain may start offering organic food and letting its local franchises customize their menus to cater to regional tastes. The fast food chain already sells organic milk and juice in Germany and France. But its $2 jalapeno burgers and chorizo burritos haven't taken off at U.S. locations where they've been offered. 

Thompson also told The Wall Street Journal the chain will simplify its menu, offer digital payment systems and increase staffing so customers don't have to wait as long for their orders.

"Customers want to personalize their meals with locally relevant ingredients," he said. "They also want to enjoy eating in a contemporary, inviting atmosphere. And they want choices in how they order, choices in what they order and how they're served."

For Coca-Cola, its recent acquisition of Monster Beverage Corp. underscores a strategy to diversify into the market of highly caffeinated drinks for youth. But to achieve profitability targets, the Atlanta company is planning cost-cutting moves according to Forbes and Reuters. Those moves may include restructuring its global supply chain and refranchising its U.S. bottling operations.

Sales of carbonated soft drinks in the U.S. have been declining for almost a decade.

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