McDonald’s faces rise in competition

Associated Press

NEW YORK

McDonald’s new boss must feel like a freshly crowned king under siege.

The world’s biggest hamburger chain is facing an onslaught of competition, from better-burger chains such as Five Guys to brands such as Chipotle that tout the superior quality of their ingredients.

Supermarkets and convenience stores are selling more on-the-go food, too. Last year, visits to convenience stores for prepared foods rose 3 percent, while visits to supermarkets were up 1 percent, representing millions of visits, according to The NPD Group.

After seeing its own customer visits decline at established U.S. locations for two straight years, McDonald’s Corp. said Wednesday it was replacing CEO Don Thompson with its chief brand officer, Steve Easterbrook. It was the latest in a string of changes the company has announced in hopes of appeasing investors and winning back customers.

In addition to plans to simplify its menu and improve service, McDonald’s recently launched a marketing campaign intended to associate its brand with the positive emotion of loving. And in early March, it’s planning a “Turnaround Summit” for franchisees in Las Vegas.

But even if McDonald’s gets its house in order, its rivals aren’t going away. Here’s a look at what it’s up against in its flagship U.S. market:

Shake Shack, which is expected to make its much anticipated debut on the New York Stock Exchange, promotes its use of hormone- and antibiotic-free beef and is emblematic of the “better burger” trend.

The gravitation toward places that promise better ingredients doesn’t end with burger rivals. Chipotle, for instance, is often cited as the successful contrast whenever McDonald’s troubles are mentioned. A big part of Chipotle’s draw is that people can walk down a line and watch their food being assembled quickly, exactly as dictated.

For established coffee chains such as Starbucks and Dunkin’ Donuts, a key way of driving sales is becoming more of a destination for food. Already, Starbucks says about a third of its transactions include a food item, and the company is pushing hard to increase that figure. It’s introducing new salads and sandwiches that can be heated up in an oven. And to attract customers in the evenings, it’s rolling out wine, beer and “small bites” such as chicken skewers to thousands of locations in coming years.