McDonald?s Slashes Prices, Buys Light Bulbs

One notable exception to the theory that fast-food eateries thrive in a recession is McDonald’s Corp., the world’s largest fast-food chain. With more than 30,000 restaurants worldwide and 13,000 in the United States, McDonald’s is also the No. 1 owner of commercial real estate worldwide.

McDonald’s had six straight quarters of earnings declines until July when a stronger U.S. dollar and lower costs resulted in an earnings increase. The company’s stock was trading at less than $18 per share in early October, down from a high of $30.72 in 2000.

As a result, McDonald’s is cutting back on the number of hamburger restaurant openings, cutting back on unhealthy trans fats in its cooking process, painting its roofs red, adding some yuppie foliage foods (like the “Grilled Chicken California Cobb” and “Crispy Caesar” salads) to its menu, and opening 11 more “dinner style” restaurants.

McDonald’s has been dressing up its restaurants in Paris to look more like coffee shops, and a franchisee has opened a three-story, 300-seat McDonald’s in New York City’s Times Square. (It has a marquee with 7,500 light bulbs.)

The company also said it won’t open as many stores next year as it did this year. This year, McDonald’s plans to open 1,300-1,400 new restaurants.

But McDonald’s problems don’t seem to be coming from high-dollar restaurants or even the mid-range fast-casual places. McDonald’s is facing considerable competition from its own ilk. It has spawned other hamburger chains that have taken away McDonald’s customers.

“The food quality at McDonald’s is not there,” said Lynne Collier, a food-industry analyst at Stephens Inc. “I think people had rather have something a little nicer. The level of service has deteriorated, and it has become a play place for children.”

Collier said adults don’t usually want to eat in that kind of atmosphere.