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 (UNKNOWN:BKW.DL) 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.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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