McDonald's Awful PR Is Enough to Make You Grimace

If you had asked me earlier this week which company would be most worthy of a wag of my finger, I would have unquestionably said Wal-Mart (NYSE: WMT  ) .

Just days ago, the mammoth retailer came under fire for a campaign to collect food for the Thanksgiving holiday for its employees who were too poor to do so for themselves. Not only were select organizations critical of this drive because of Wal-Mart's already-low wages – Wal-Mart recently topped 24/7 Wall Street's list of the 10 companies paying employees the least -- but the drive also called on existing employees to supply food for their coworkers, further infuriating employee advocate groups and some Wal-Mart employees.

Enough to make you Grimace
Thankfully, for Wal-Mart's sake, fast-food giant McDonald's (NYSE: MCD  ) did what it's done better than just about any company all year: sticking its foot in its mouth, perhaps deeper than ever before. So if any Wal-Mart executives are reading this, make sure you send a thank-you card to McDonald's management team for bailing you out of a PR firestorm.

I guess it shouldn't come as a gigantic surprise that second on the list of companies paying out the least to their employees according to 24/7 Wall Street's report was McDonald's. Employee advocate groups have lobbied McDonald's to raise its wages on numerous occasions to little avail. Although McDonald's does provide an employee resources website, it may seriously want to double- and triple-check what gets posted because some of the advice ranks highly up the McStupidity scale!

No clowning around
In July, McDonald's came under fire for posting a sample budget on its resources website, which you can view here. Within that budget was the assumption that employees would pick up a second job, that health insurance would cost just $20 a month, that employees could budget $100 for an entire month of groceries and gas, and, in its original estimate, that there would be no heating costs whatsoever. It was as if McDonald's was living in a McFantasyland.

It appeared as if McDonald's was going to put its budgeting PR flub in the rearview mirror if not for a duo of errors that have emerged in just the past month, once again putting the fast-food giant back in the limelight for all the wrong reasons.

Roughly one month ago, the McDonald's resources hotline, when confronted by an associate as to what she should do to make ends meet on a McDonald's hourly wage, was told to apply for food stamps and Medicaid, which, as you might imagine, didn't go over well with the employee or labor advocates according to Business Insider.

McDonald's takes another McRibbing
Then, just this week, McDonald's stuck its foot in its mouth once again when labor advocate group Low Pay Is Not OK jumped all over the McResources website's sometimes-ridiculous advice for employees in need of assistance. According to Low Pay Is Not OK, the following were actual suggestions offered to employees:

  • Cut your food into smaller bites to make it last longer.
  • Quit complaining -- it only increases your stress.
  • Sing to lower your blood pressure.
  • Sell your unopened Christmas presents online to make some quick cash.
  • Take a holiday -- it will reduce your risk of heart attack by 50%.

I really don't know whether to laugh or take this seriously. McDonald's is advocating eating smaller portions of food to make it last longer for those who are going hungry and selling Christmas gifts just to make ends meet for lower-income individuals? No, that's not going to come across as obtuse or callous to anyone... (please note my heavy tone of sarcasm).

How its peers Hamburgled its ideas
What's really disturbing is that McDonald's problems aren't just confined to its poorly chosen interactions with its employees. The Golden Arches are flat-out struggling in comparison to a number of its peers, which have taken the initiative to move into a niche that McDonald's doesn't operate in or who have beaten McDonald's at its own game.

The much-smaller Jack in the Box (NASDAQ: JACK  ) , for example, has the advantage of offering breakfast all day, which has been a driving force behind its surge in customer traffic. Having an expanded selection of food offerings is one surefire way to chip away at some of McDonald's market share.

Starbucks (NASDAQ: SBUX  ) and Burger King Worldwide (NYSE: BKW  ) have also capitalized on the fast-food trend by emulating McDonald's healthier food menu options. Starbucks, for instance, over the past couple of years has tugged away health-conscious consumers from McDonald's by offering them more nutritious local and organic offerings. On the other end of the spectrum, Burger King has emulated McDonald's by introducing Caesar salads and smoothies to its menu, which are eerily similar to those offered by McDonald's. With the latter struggling to introduce new ideas and its dollar menu not driving traffic like it once did, its peers are quickly closing the gap.

Imparting a McNugget of wisdom
Back in July, I pinpointed McDonald's as my dubious example of a company that highlighted the biggest labor problem in our country: underutilization. With a turnover rate of roughly 143%, inconsistent hours, and relatively low wages, the drive to be engaged in the success of the company just isn't there for many of its employees.

My nugget of wisdom, should the executives at McDonald's be listening, is to focus less on gimmicks and realize that your employees are the frontline representatives of your company. If McDonald's worked on improving worker engagement, I believe it would see its sales and profits begin to improve. Until then, I'm not certain it'll remain a strong investment opportunity.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 23, 2013, at 12:26 AM, Corsair3117 wrote:

    The last third of this article, focusing on fast food rivals stealing Mickey D ideas and giving them a winning twist is quite useful. The 2/3 that precedes it is a sophomoric class warfare screed. Taking a union financed pressure group's analysis without critique is naive or worse and shows why more and more investors smirk "I went to that social advocacy site Motley Fool the other night and investment talk broke out!" Economics 101 states that the optimal pay scale for employees to ensure the healthy survival of a firm is neither what Big Labor considers slavery nor Monty Burns considers foolish largess but what the INTRINSIC worth of that JOB adds to the operation. The net worth or national sales of the place is IRRELEVANT. The principle is identical for the shoe string luncheonette down the street as it does for McDonald's. To operate an idiot proof cash register or microwave a fish sandwich doesn't demand the same skill set as a tech or even administration assistant at a silicone chip firm; or even what a line operator at Coor's brings to the party. Guess what? The latter jobs pay more..what a surprise. Not to mention (as the article surely didn't) that unlike cushy union execs claim, your eyes when entering McD or Burger King or Wendy's are not greeted by an indentured crew of family bread winners but a majority of employees that are kids getting their invaluable first job experience or housewives taking part time jobs after their stint as school bus drivers. I'm not asking the author to take the long road to even handedness but at least give the Motley Fool punching bags, WMT and MCD a scintilla of the bend over backward..er.. fairness you show to the "If you like your plan you can keep it" Obamacare ponzi scheme.

  • Report this Comment On November 23, 2013, at 7:00 AM, betty15 wrote:

    Which union do the Motley Fools pay dues to? You writers seem to think that McDonald and Walmart should pay more than WEN, DLTR, FDO, DG, WMT.

    Why not post an article that WMT actually pays more than the average retail wage? Oh that would be the truth.

    A company is in business to make money. They have risked capital to start a business and deserve a profit. There is no reason to pay more than the going wage.

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