McDonald's Plan Needs to Focus on Food

StocksMcDonald's boss Steve Easterbrook's  turnaround plan failed to convince many investors that the company has found a coherent direction. Shares of McDonald's (NYSE: MCD) stock fell more than half of a percent after he unveiled the plan on Monday.

Easterbrook plans to tighten and restructure McDonald's global operations into four primary segments. He also wants to accelerate franchising, giving a significantly larger share of restaurants to individual owners.

But while the plan included plenty of buzzwords, investors still asked: where's the beef? Under the banner of making McDonald's a more "modern, progressive burger company", Easterbrook talked about "building brand excitement" and "digital hubs" meant to somehow put the customer's voice first.

But Easterbrook didn't address how anyone is supposed to get excited about these initiatives - or the company's prospects - with a belly full of mediocre fast food. Other than a couple of nods to improved "food quality and choice" there were few specifics about how the company's fare will be improved.

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Competitors like Chipotle have laid out very clear sustainable sourcing and quality standards. Consumers see this as a much stronger link between the idea of healthy, quality food and the Chipotle brand, and investors have reacted positively to the initiatives.

This is the big flaw in Easterbrook's plan. A turnaround plan for a burger joint should include some mention of the burgers.

Money Morning Chief Investment Strategist, Keith Fitz-Gerald, made this point last week. "It's very significant to me that consumers are willing to pay 60%, even 70% more for burgers at Shake Shack or Five Guys," he said, "when at the end of the day they're splurging on what is still just a slab of meat between two buns."

For McDonald's to rebuild its market share and lure investors back, it will have to spend more time focused on making the best slab of meat in town.