McDonald's celebrates its salad days as sales of healthy meals rocket
Friday 23 July 2004
The fast-food giant McDonald's posted its fastest sales increase in 17 years yesterday, in a remarkable turnaround the company credited to its new line of salads and other "healthy" options.
Just 18 months after the company posted its first quarterly loss and saw its share price drop two-thirds of its value, it announced second-quarter net income of $591m (£320m), up from $471m for the same period last year. The 25 per cent increase was the biggest single-quarter jump since 1987.
McDonald's has faced every obstacle imaginable in the past two years - complaints about its service, lawsuits attempting to blame the company for America's obesity epidemic, a mad-cow disease scare, increases in beef and cheese prices, attacks from anti-globalisation protesters and, most recently, the documentary Super Size Me, in which a New York-based film-maker eats himself sick on a steady diet of McDonald's cheeseburgers and fries.
McDonald's and other fast-food chains appear to have revived customer interest, however, by diversifying their menus and giving at least the appearance of healthier options. Wendy's, a McDonald's subsidiary, and Burger King have also increased their salad, low-fat and low-carb options, with similar positive effects on the bottom line.
"We are encouraged by this progress and confident that our service, food, value and marketing initiatives will generate steady improvements over the long term," an ebullient McDonald's chief executive, Charlie Bell, told reporters in a conference call.
In the United States, as in Europe and other parts of the world, customers can now order fruit slices for breakfast, bunless sandwiches and lettuce-wrapped burgers, bottled water instead of soda, and full meal-style "premium salads". As of a couple of months ago, the company has begun offering Stepometer machines so customers can monitor how much exercise they are getting in the course of their day.
It is not clear whether the company's new-found success is due to a perceived increase in quality and healthiness on its menu - something that has been contested by its detractors - or simply to the increased variety of food on offer.
In his film Super Size Me, Morgan Spurlock uses McDonald's own nutrition statistics to show that the salads, too, are chockful of fat, cholesterol and other health no-nos - because of the dressings and because of their non-green ingredients. The Caesar salad with chicken premiere, for example, contains more fat than a cheeseburger.
Mr Spurlock's film has been a public relations, if not a commercial, disaster for the company. Shortly before it was released in the United States, McDonald's abandoned the practice of "super-sizing" - offering monster portions of fries and Coke - and moved to introduce the Stepometer.
Stock analysts commenting on the McDonald's turnaround have credited much of it to improved management of the chain, starting with Jim Cantalupo, chief executive until his sudden death from a heart attack in April, and continuing under Mr Bell.
Mr Bell is not well either - having just undergone a course of chemotherapy - and he said in his conference call that although he felt good the company had a succession plan in place, just in case.
A WEIGHTY ISSUE
Food companies and outlets are increasingly turning their attention to producing more healthy fare for reasons from customer preferences to the threat of legal action.
In the name of "consumer demand", Birds Eye gave a guarantee this month that all 130 of its products are free from artificial colourings, flavourings, preservatives and, therefore, nearly all E numbers. It also announced it was substantially cutting salt and saturated fat levels.
But adverse publicity was what stung several firms, including United Biscuits and Cadbury Schweppes, into action. As a result, both companies announced they were reducing levels of hydrogenated vegetable fat, a hardening agent that doctors say has a similar effect on human arteries.
The Department of Health last month "named and shamed" 27 companies including McDonald's, Heinz and Nestlé, for failing to form adequate plans to cut salt levels. Manufacturers responded with a 5 per cent cut in salt in sliced bread - food experts said was just a third of that which should be put into effect immediately.
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