How Can McDonald’s (NYSE:MCD) Regain its Lost Glory?

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By Joseph Carducci on November 13, 2014 Consumer Staples

McDonald’s (NYSE:MCD) is going through a crude patch, with its finances and reputation in jeopardy. The rise in health awareness and the demand of healthy food has pushed McDonald’s (NYSE:MCD) into a state, from which it is finding hard to recover. Also, a controversy regarding a certain Chinese supplier has marred the reputation of the fast food chain, which has 34,000 stores in over 119 countries. Even with this magnitude, McDonald’s (NYSE:MCD) is low on finances and on the verge of being squeezed out by competitive rivals. September this year, marked the worst period in the history of McDonald’s (NYSE:MCD), when the fast food company observed its worst same-store sales decline.

McDonald’s (NYSE:MCD) suffered a loss of 6 percent in the last six months as far as share price is concerned. However, there is still a way to reverse this decline. McDonald’s (NYSE:MCD) require an activist shareholder, that is serious about investing in the company and reviving its lost glory. It might seem like a steep task, but it’s not really that hard, considering the power McDonald’s (NYSE:MCD) can exert. Back in 2005, the activist hedge fund Pershing Square invested in McDonald’s (NYSE:MCD) and urged the company to consider reconstruction. Pershing pitched a suggestion that McDonald’s (NYSE:MCD) should separate its real estate business and its fast food chain business. That would improve shareholder value. At that time, the rising stock price of the company proved as a hurdle for Pershing to persuade McDonald’s (NYSE:MCD) to do so. Pershing went out with a profit, however, they anticipated murkier waters for McDonalds (NYSE:MCD) in the future.

McDonald’s (NYSE:MCD) waning stock could be stabilized if the investors of the company make an offer to Pershing to come onboard again. If not Pershing, then perhaps another activist hedge funding organization. The strategy worked for Burger King (NYSE:BKW), which only deals with real estimate and franchise agreements. McDonald’s (NYSE:MCD) won’t make a move like that by itself but if it is persuaded by an activist, it might form an agenda around it.

McDonald’s (NYSE:MCD) can also help its situation, if it stops complicating its menu or bringing back old offers in order to regain customers and sales. McDonald’s (NYSE:MCD) must embrace the fact that the problem is centered on health. McDonald’s (NYSE:MCD) should pull some strings and gain the public trust by introducing meals that have healthier options. This would not only attract the usual teenage age groups, but will also bring in the adults and aged person.

McDonald’s (NYSE:MCD) is also revamping its image, changing the organizational hierarchy and whatnot. According to the changes, the franchises will have more power over local markets when it comes to marketing decisions. McDonald’s (NYSE:MCD) is really looking forward to simplifying the menus and enhancing the quality of the food it is offering. If McDonald’s (NYSE: MCD) makes acute decisions, in the times of current market scenario, things will get better.