If someone mentioned McDonald's (MCD 1.05%) 10 years ago, you would have thought of hamburgers, chicken nuggets, French fries, a lot of calories, and a lot of fat. You also would have thought of McDonald's as the No. 1 fast food destination for parents to bring their kids. If you go back 20 years and beyond, McDonald's dominated the fast food landscape, and it was even seen as an ideal location for kids' birthday parties.
A lot of this remains true today, but not to the same extent. McDonald's still sells hamburgers, chicken nuggets, and French fries, and while these foods still have a lot of calories and fat, McDonald's has been gradually moving toward catering to the health-conscious consumer, which is an enormous movement in today's world. McDonald's also doesn't have much of a choice from a business perspective.
If millions of consumers are moving toward healthy food alternatives, then McDonald's must adapt in order to stay ahead of Burger King (BKW +0.00%) and Wendy's (NASDAQ: WEN).
Cutting calories
In the 20th century, it seemed like everyone brought their kids to McDonald's. It was a happy place to go with a laid-back atmosphere, toys that came with many meals, and playgrounds. Parents didn't think much about it in regard to health concerns. However, as the Internet grew, more information became available to consumers, and they learned that McDonald's food was more unhealthy than they realized. To make matters worse, more competitors began to pop up.
McDonald's still remains the No. 1 fast food restaurant in the world, but it certainly doesn't dominate the landscape as it did in the past. However, McDonald's is methodically adapting to today's consumer demands. For instance, while its new Happy Meals aren't exactly healthy, they're a step in the right direction.
The first positive is that the new Happy Meals come with fewer French fries. Additionally, the new Happy Meals come with non-fat chocolate milk or 1% white milk. Today's Happy Meal still comes with the option of chicken nuggets, a hamburger, or a cheeseburger, but side-item alterations have led to an average of 98 fewer calories per meal. Every Happy Meal comes with a low-fat dairy product or produce, such as apple slices. There's more good news.
As McDonald's continues to alter its Happy Meal toward the health-conscious consumer, there is more potential for future sales increases. McDonald's likely doesn't want to move too fast in this regard, since its Happy Meal is popular in its current state. It's all about subtle changes, reviewing the results of those changes, and reacting accordingly.
Other trends A recent study based on more than 230,000 Happy Meal purchases at 30 restaurants in the summers of 2011 and 2012 also revealed some positive trends in regard to health.
People order chicken nuggets with their Happy Meal 61% of the time, which is exactly the same as the situation prior to the Happy Meal changes. However, chocolate milk is now ordered 20% of the time, up from 16.5% of the time; white milk is now ordered 6.5% of the time, up from 5% of the time; and soft drinks are ordered 52% of the time, down from 58% of the time.
The above stats prove that McDonald's is heading in the right direction, catering more to today's health-conscious consumer. Furthermore, these stats demonstrate McDonald's slow and steady approach to change, which prevents big mistakes that are difficult to reverse.
Whether these trends are due to the health-conscious consumer being more selective or McDonald's marketing more toward the health-conscious consumer is unknown. We do know that McDonald's continues to head in the right direction, which should lead to increased sales down the road.
Healthy alternatives
Wendy's is also attempting to cater to consumer trends. Its Kid's Meal offers nutritious options, such as TruMoo 1% Lowfat Milk (30% Calcium), all-natural 100% juices (220% Vitamin C), fat-free apple slices, and the option of natural-cut French fries.
Let's not forget about Burger King, which recently reintroduced its Big King sandwich. The Big King has fewer calories than the Big Mac at McDonald's. Additionally, Burger King's satisfries have 40% less fat and 30% fewer calories than McDonald's French fries.
Slow yet likely returns in fast food
Despite recent moves by Wendy's and Burger King to become healthier, anything Wendy's and Burger King accomplish on this front can be done on a larger scale by McDonald's. Stronger brand recognition is a big reason why the winners keep winning over the long haul in almost any industry. McDonald's is a prime example. A final selling point: McDonald's also yields a healthy 3.30%.
