I t wasn’t all that long ago that American journalist Thomas Friedman was making headlines with his so-called Golden Arches Theory of conflict prevention: No two countries that both had McDonald’s, he wrote in 1996, had ever fought a war against each other. Around the same time, McDonald’s was drawing more unfavorable but equally (in its way) deferential attention from protesters all around the planet who saw the fast-food chain as a symbol of America’s suffocating cultural dominance. Admire it or deplore it, you had to acknowledge it: The “McDonaldization of everything” was a fact of late-20th-century life. More than 100 countries boasted a McDonald’s, and most of the rest, it seemed, wanted one. “Mickey D’s” appeared invincible.
Then came the recent announcement of the U.S. corporation’s first quarterly losses since going public in 1965. Mr. Matthew Paull, executive vice president and chief financial officer, admitted, “This has been a difficult year, and our financial performance has been below expectations.” The reaction was, almost uniformly, surprise bordering on shock. As a commentator for one major U.S. newspaper eloquently put it, “This is unsettling, as when a river burns or a diamond shatters.”
This sense that a cultural milestone had been passed was underscored for local burger-lovers by the coincidental announcement that McDonald’s Japan unit was also about to lose money for the first time in 29 years. As a result, the company is reportedly planning to shut 176 unprofitable outlets around the country next year. True, that still leaves almost 4,000 restaurants in operation, but it remains the company’s biggest number of closings in a single year since McDonald’s first opened in Japan in 1971.
Even coming a full year after the first warnings that just such a development was on the horizon, the announcement feels like a harbinger of sorts. If “Makudonarudos” can wobble, what can’t? Burger King came and went, but Big Macs, Teriyaki McBurgers and French fries had come to seem as much a part of the Japanese fast-food landscape as soba or onigiri. And it’s not just about food — luckily, since McDonald’s bland, homogeneous, fat-laden fare barely qualifies as such. McDonald’s calls its outlets “restaurants,” but that’s a stretch: A McDonald’s is not so much a restaurant as an attitude, a place to be, a way of saying yes (or, as the case may be, no) to what America stands for. How can such a convenient, malleable symbol suffer something as ignominious as a quarterly loss? If this constitutes even a tiny hint that McDonald’s could someday disappear from Japan, what might not go next? Disneyland? Military bases? English?
And that’s just Japan. If even the mighty U.S. parent company has stumbled — as this month’s sobering financial report suggests that it has — the prospect of a global McShrinkage is no longer unthinkable.
It’s possible, of course, to read far too much into a 4- or 5-cent dip in share price or a one-time net loss. There are solid reasons for the sales slumps that preceded the bad news — and they are not even the same in different markets. The U.S. McDonald’s attributes its weak quarterly performance to several factors: an expensive discount war with Burger King, Wendy’s and other chains; lower-than-expected sales; and so-called restructuring costs. McDonald’s Holdings Co. (Japan), in contrast, was hit hard by the mad-cow beef scare in September. Even though the company uses Australian beef, which was unaffected by the disease, sales fell as Japanese consumers prudently chose to avoid beef altogether. This trend could well reverse itself in the coming year. In any case, the local and specific nature of the company’s problems makes predictions of a global demise seem overstated.
And yet, what are we seeing in the wake of this month’s dismal quarterly statements? Reports that McDonald’s is “tinkering” with its original, defining product — the hamburger — in an attempt to get sales back on track. (If you must know, the beef patties will be spiked with a new seasoning mix, to “improve their flavor,” and new buns are in the works as well.) On the one hand, this could be seen as tweaking so insignificant as to be hardly worth mentioning. On the other hand, it could be seen as a desperate attempt to “fix” a product that is starting to lose its edge in the marketplace.
The point is, though, it doesn’t matter why McDonald’s has suddenly slipped, and it hardly matters what its marketing geniuses do to regain traction. Like it or not, the suspicion has been sown: Maybe McDonald’s never was the invincible cultural force that either its devotees or its critics thought it was. And maybe “America” isn’t, either.
By subscribing, you can help us get the story right.