The latest trend at U.S. eateries is to serve a healthy menu, owing to consumer preference for fresh, organic, nutritious and low calorie food. Rising health concerns and increasing awareness about obesity and related diseases have led to the shift in consumer preference toward healthy and “good for you” products. In order to keep with the trend McDonald’s Corp. MCD will no longer serve chicken treated with antibiotics at its U.S. restaurants.
The hamburger giant recently announced that it will discontinue the use of chicken raised with antibiotics that are important to human medicine within the next two years. The company has been working with chicken suppliers for long to curtail the use of antibiotics in its poultry supply.
One of the company’s chicken suppliers, that reportedly includes Tyson Foods, Inc. TSN, has reduced the use of antibiotics effective in humans by more than 84% since 2011 and ceased using antibiotics at its 35 hatcheries late last year. However, its chicken suppliers will still be able to use a type of antibiotic called ionophores that keeps chickens healthy and is not used in humans.
McDonald’s will also offer milk jugs of low-fat white milk and fat-free chocolate milk from cows that are not treated with rbST, an artificial growth hormone. This move is expected to be implemented at McDonald’s restaurants later this year. The milk jugs are popular during Happy Meals.
Why the Move?
Of late, McDonald’s has been experiencing sluggish comps owing to heightened competition and a few wrong decisions that have slowed service. Therefore, in order to rectify its slip-ups and win over its customers, the company has undertaken this move just three days after McDonald appointed Steve Easterbrook as its new chief executive.
The company is also cutting down on its capital expenditure by limiting store openings in markets that are experiencing significant near-term challenges, including China, Russia, Germany and the U.S. Instead, it intends to focus on sales and profits in its key operating regions.
The launch of the “Create Your Taste” program, efforts to reduce waiting times for customers by simplifying menu portions and decreasing the number of Extra Value Meals, and a digital strategy to make ordering easy for customers are the main focus areas of the company. In fact, U.S. comps for the month of Jan 2015 showed slight improvement, thanks to its efforts.
With the current move, McDonald’s joins other restaurant companies like Panera Bread Company PNRA and Chipotle Mexican Grill, Inc. CMG that have been striving to dish out fast food without unnecessary hormones to appease the health-conscious customer and focusing on the quality of the ingredients.
It remains to be seen as to when these initiatives revive McDonald’s fortunes and restore it to its erstwhile position. McDonald’s currently has a Zacks Rank #4 (Sell).
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