Does McDonald’s Have Its Groove Back?

Interesting moves by the Golden Arches suggest the answer is yes.

Jun 8, 2014 at 5:30PM

Source: Burger King Worldwide

As I continue to see commercials from Burger King Worldwide (NYSE:BKW) which state that "size matters" as it brags about its Big King sandwich, I can't help but be reminded that "size" is exactly the thing McDonald's (NYSE:MCD) got rid of when it axed its "super size" option. What a boneheaded move.

While it's been frustrating to watch McDonald's steadily and almost systematically dismantle the very things that made it the powerhouse it is today, evidence is starting to surface that McDonald's may have finally woken up and smelled its own free coffee.

The Burger King attack
While Burger King has dabbled a bit with healthier options that include its lower fat, lower calorie Satisfries, the King of the Whoppers never seems to take its eye off the ball in realizing that its place in the food chain is not to be a health-food mecca. Most of us pop into McDonald's or Burger King on occasion -- or even far too often -- for one reason and one reason only.

That reason is to indulge. We want a greasy burger with greasy fries and a thick milkshake. We want extra artery-clogging mayonnaise on our fried chicken sandwich. We know the "secret sauce" isn't good for us, and we don't care. Or at least it's not stopping us. McDonald's, cut it out already. You caved into pressure, and now the result is that our kids are asking for Burger King a little more often in comparison with McDonald's.

McDonald's waking up?
You've probably seen it by now. McDonald's finally brought back Ronald McDonald. Why did he go away? Oh yeah, because he was encouraging our kids to eat bad food. That sounds noble, but if you're going to sell food to kids, you should "sell" food to kids. Or don't.


Now kids have a new mascot. Adults find him creepy, but maybe kids don't. Either way, it's an excellent step in the right direction and a change of attitude. Can you imagine if Dairy Queen or Chuck E. Cheese stopped marketing to kids because their food isn't the healthiest? The person in charge would be fired on the spot.

Focused marketing
Don't get me wrong. Healthy options for kids and adults are great. However, pushing them on McDonald's core market is ridiculous. For a while McDonald's almost completely stopped marketing its signature Big Mac, which isn't called the Healthy Mac, and Burger King has been showing positive same-store sales with its Big King ever since.

Mcdonalds Bacon Clubhouse Burger

Bacon Clubhouse Burger. Source: McDonald's

McDonald's seems to be finally fighting fire with fire by offering its new Bacon Clubhouse Burger plus the option predominantly advertised on its menu of throwing some bacon onto any sandwich. Bacon. Now we're talking. The mecca of unhealthy food. It's great.

Foolish final thoughts
As long as McDonald's continues to focus on what its core customers want and quits trying to become a complex health-food latte bar, expect to see McDonald's resume its long-term same-store sales growth trend again. I say bring back the super size. It at least had the illusion of super value.

Burger King knows that "size matters" and is flaunting it. For most of us, if we're going to indulge, we're going to go all the way. As Burger King now says, "Be your way." It sounds like a subliminal (or direct?) message that makes customers feel empowered. We don't need McDonald's telling us how much is too much.

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Nickey Friedman has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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