McDonald's Debuts an Unnerving New Mascot and Highlights Its Ongoing Identity Crisis

Source: McDonald's Twitter

McDonald's (NYSE: MCD  ) is suffering from identity issues. As fast casual restaurants like Chipotle continue to woo consumers away from the Golden Arches and traditional rivals like Yum! Brands' (NYSE: YUM  )  Taco Bell and Burger King (NYSE: BKW  ) increasingly look to eat into the breakfast business, Ronald and company have been forced to do some soul searching. The world's largest restaurant chain is attempting to reshape its image, hoping to shed unhealthy associations while still retaining its reputation for value.

Happy, the recently debuted mascot for McDonald's signature Happy Meals, is the latest attempt to put a new face to the company's operations. The toothy box debuted to unfavorable reactions on social media and news outlets, with critics quickly jumping to describe the new character as "scary," "terrifying," and "hideous." The harsh reviews highlight the messaging difficulties the company is facing.

Is McDonald's losing its grip on the kids meal?
McDonald's has historically done a much better job of appealing to children than its chief fast food competitors, but sales of the combo meals have lagged in recent years. While restaurants like Taco Bell, Burger King, and Wendy's have all packaged toys with meals to appeal to young consumers, the Happy Meal program is still nearly synonymous with the practice. It's not surprising to see the company attempt to appeal to an important demographic with a new cartoon creation.

Setting morality and health issues aside for the moment, introducing children to McDonald's at a young age is a great way to increase the likelihood that they will continue to do business at the chain as they get older. Naturally, this marketing approach has garnered its fair share of opponents, prompting McDonald's to infuse its child-based advertising initiatives with nutritional data and information. The move is a necessary one due to an increasingly health-conscious consumer base, but the perception of Happy Meals as "fun" is central to their appeal. Enter characters like Happy.

Happy isn't the first new mascot for Happy Meals to be introduced within the last five years (the character debuted in France in 2009). 2012 saw McDonald's debut Ferris and his animal friends, cartoon creations who emphasized the value of healthy lifestyles.

Happy looks familiar

Source: DespicableMe.com

The recent crowning of Happy as the new ambassador for its kids meals may be an indication that McDonald's is looking to put some of the focus back on fun. Happy is still intended to be an ambassador for health, but the character's design bears a striking resemblance to the Minion characters from Universal's Despicable Me series. Across two movies, the franchise has generated approximately $1.5 billion at the global box office and spawned valuable merchandising opportunities.

The Minion characters are hugely popular with young children, so while Happy appears to be a failure with adults, the relevant jury is still out. The extent of the pushback against the character makes it unlikely that it will enjoy a long life as a center stage mascot, but reactions on sites like Twitter aren't a great gauge for whether or not Happy can become a hit with kids.

Taco Bell and Burger King aim to eat breakfast
The importance of marketing toward children for McDonald's is compounded by challenges to the company's breakfast dominance. Taco Bell recently made waves with a series of ads that took aim at McDonald's and brought attention to its own early morning offerings. The company's Breakfast Quesarito test item has been doing good business and getting solid reviews, making it the chain's most successful test product since the Doritos Locos Tacos. The Quesarito is likely to join the A.M. Crunch Wrap and the Waffle Taco as nationwide menu additions.

Source: TacoBell.com

Burger King has taken a different approach to getting a bigger bite of the breakfast market: introducing burgers as a morning option for its customers. Whether this winds up being a winning play remains to be seen, but it's clear that breakfast is a focal battlefield for fast food giants.

Will McDonald's strike back on the breakfast front?
Rumors that McDonald's will extend its breakfast hours have circulated for years, but the influx of competition has brought added pressure to shake up its menu offerings. Such a move could help to ensure the company's breakfast food dominance, but it could also be pricey for franchisees. This could make it necessary for the company to step in and offset some of the cost. This is yet another instance where McDonald's faces a choice that has the potential to profoundly impact its corporate identity.

Happy is a sign of bigger problems
With sales of children's meals in decline, Happy is a stumble for McDonald's at a crucial juncture and a reminder of the inhospitable marketing climate the company faces. Ronald and friends have access to billion-dollar advertising budgets, and Happy Meals are estimated to make up approximately 10% of the company's sales. The Happy character may yet go on to win an audience, but with such immense resources and so much riding on the line, the grinning box makes for an uneasy savior.

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Read/Post Comments (9) | Recommend This Article (8)

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 May 25, 2014, at 9:19 AM, ozzlefinch wrote:

    I'm trying to figure out why an advertising character for a burger joint matters to me. It does not provide me with income, nor does it advance any mental growth or greater understanding of the human experience. It's merely a marketing tool for increasing the sale of hamburgers to the public. Why is this even news?

  • Report this Comment On May 25, 2014, at 10:21 AM, overeasy wrote:

    McDonald's needs to review - franchise by franchise - their horrendously spotty customer service. Spend less time coming up with confusing mascots, and train your employees to actually perform their jobs with care and efficiency. There are a couple of decent units here in NJ, but the majority are staffed by hostile, incompetent and lethargic dolts. The only thing differentiating the managers from the crappy help is the color of their shirts.

  • Report this Comment On May 25, 2014, at 4:30 PM, hotmormon wrote:

    I think they look a little scary to me what was wrong with old ones

  • Report this Comment On May 26, 2014, at 7:59 AM, catman53 wrote:

    what they need for a logo is the Grim Reaper. With "If you eat this food it will kill you!"

  • Report this Comment On May 26, 2014, at 10:50 AM, Tbear62 wrote:

    Its got teeth like Slimer from Ghostbusters. I dont find it disturbing but more so irrelevant to McDonalds. After spending so much time and money a couple years ago trying to distance itself from the notion that they market to kids ( the toys and happy meal debacle) they seem to be jumping back into the crap pit with this one.

  • Report this Comment On May 26, 2014, at 11:02 AM, AZJEM wrote:

    They need to back to what got them started in the first place. I grew up with Ronald McDonald. We actually had a burger-fries-coke on occasion. We really loved it when they would have Ronald show up at our McDonalds (yes, the entire name) and we would get little cheapo toys and balloons. I realize times have changed and that may not be too exciting for kids today but the fact is we loved Ronald. He wasn't scary and he didn't copy any of the 1000 other characters they have out now. And it wasn't too awful long ago his figure was on benches for kids to sit with while you were at the restaurant. Point is, why mess with a good thing? What was so wrong with this simple combo? The Happy Meal: Burger/nuggets, fries and drink with a toy in a Ronald box.

  • Report this Comment On May 26, 2014, at 2:54 PM, WallaceNDavis wrote:

    Happy has been used in Europe for years. So he hardly represents "the latest attempt to put a new face to the company's operations," does he? And he made his debut before "Despicable Me," so that whole section of your commentary is incorrect. What's left is nonsense.

  • Report this Comment On May 27, 2014, at 9:22 AM, keithnoonan wrote:

    @WallaceNDavis

    I note in the article that Happy was first introduced in 2009. That Happy has been given center stage partially because of his similarities to the immensely popular Minion characters is the point I'm aiming to make.

  • Report this Comment On May 27, 2014, at 9:41 AM, Interventizio wrote:

    It doesn't take a genius to figure out that the new mascotte should be an animal, not an object. c'mon Mcdonald!

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