In response to slumping same-store sales and a poor public image, McDonald's (NYSE:MCD) recently launched a social media campaign to answer questions about its food on Twitter, Facebook, and YouTube.
The campaign, which stars former MythBusters co-host Grant Imahara, is intended to "have an open conversation and to show people firsthand how we make our most iconic menu items," according to a statement from Kevin Newell, the company's U.S. chief brand and strategy officer. In the series, Imahara visits McDonald's restaurants and suppliers to discuss some unflattering stories about the chain -- for example, whether McDonald's burgers contain worms, or why its burgers don't rot for months or years.
So will this desperate social media push help the Golden Arches shine again? Let's take a look at the motivations behind this strategy, and why it could be the wrong play at the wrong time.
Why McDonald's needs a miracle
In August, McDonald's posted its worst same-store sales decline since 2003, due to a food safety issue with a Chinese supplier and sluggish demand in the U.S.
Global same-store sales slid 3.7%, while U.S. same-store sales fell 2.8%. In the low-end market in the U.S., McDonald's has struggled to compete against more exciting value menu items from rivals Burger King Worldwide (UNKNOWN:BKW.DL) and Yum! Brands' (NYSE:YUM) Taco Bell. Meanwhile, bistro competitors like Panera Bread (NASDAQ:PNRA.DL) and Chipotle (NYSE:CMG) have forced McDonald's to offer healthier menu options and renovate its stores.
Interest in fast food chains is also waning across all age groups. According to research firm Brand Keys, visits to fast food chains among Millennials during the third quarter declined 20%, fell by 11% among Gen X'ers, and 18% among Baby Boomers. To make matters worse, a recent Consumer Reports survey of over 32,400 readers ranked McDonald's burgers as the worst in America.
Meanwhile, unpleasant stories about McDonald's supply chain, including the infamous "pink slime" story, continue to circulate. The "slime" was actually scrap meat treated with ammonium hydroxide, a bacteria-killing ingredient found in household cleaners which turned the meat pink. In 2012, McDonald's stopped using ammonium hydroxide, but the damage had already been done.
Why social media is not the answer
Since many customers didn't get the memo about the pink slime, it would seem logical for McDonald's to explain itself on social media. Unfortunately, this half-baked idea simply magnifies the controversies of the past without focusing on its core problem -- a lack of appealing menu items.
McDonald's also has a dismal track record in social media. In early 2012, it launched several tweets with the #McDStories hashtag, aimed at circulating "inspirational" stories about its suppliers and employees. The hashtag was quickly hijacked by Twitter users, who posted messages about "diabetes," "foaming agents in chicken nuggets," "food poisoning," and "dog food."
To be fair, McDonald's wasn't the only fast food company to have a social media campaign backfire spectacularly. In 2011, Wendy's (NASDAQ:WEN) started the #HeresTheBeef hashtag to promote its burgers, but it was quickly hijacked by unappetizing facts about factory farming. The lesson is simple -- companies have little control over a social media campaign once it goes viral.
For its current "our food, your questions" campaign, McDonald's is simply reminding people about all of the worst stories about its food -- pink slime, hormones, fillers, and preservatives -- while asking a former MythBuster to set the record straight. But in my opinion, sanitized corporate videos simply don't make people trust McDonald's. On the contrary, it makes the company look desperate.
So what should McDonald's do?
McDonald's won't win back lost customers by educating them about its supply chain. Customers simply want better tasting, healthier food. When your hamburgers are rated as the "worst in America," it's not time to show customers educational videos about meat processing -- it's time to make and market better quality hamburgers.
McDonald's has the right idea with its "build-your-burger" test program in several locations, which lets customers order custom burgers via a touch screen menu. It makes McDonald's burgers look fresher and more "bistro-like," as opposed to pre-made burgers which are left under the heat lamp.
A bolder strategy would be to acquire smaller burger chains. In the same report that named McDonald's the worst in America, Consumer Reports named The Habit Burger Grill, a small chain in California, as the best. Therefore, it could make sense for McDonald's to try to buy The Habit (or another well-loved chain) and expand it nationwide to offset its own weak same-store sales.
As for its value menu, McDonald's needs to offer more creative menu options, on par with Taco Bell's Doritos Locos Tacos or Burger King's French Fry burgers, to get customers talking about the chain (in a positive way) again.
McDonald's social media blitz is an interesting approach to improving its public image, but it simply shines the spotlight on the fast food giant's previous problems. If the company wants to turn itself around, it needs to give customers better quality hamburgers and more exciting menu options -- not simply remind them that they're not made from pink slime.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill, McDonald's, and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. 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.