McDonald's is making drastic changes to save business.
The fast-food chain's chief executive, Steve Easterbrook, revealed a massive turnaround strategy on Monday, following years of lagging sales and traffic.
Easterbrook also admitted to some of the chain's blunders that led to its current slump.
Here are the weaknesses that Easterbrook mentioned:
1. McDonald's needs to serve higher-quality food.
Customers are demanding "great-tasting, high-quality food," and McDonald's needs to make changes to some of its core menu items to meet that demand, Easterbrook said on a call with analysts Monday.
In an recent step in that direction, the company pledged to remove antibiotics and hard-to-pronounce ingredients from its chicken.
2. McDonald's has been slow to react to customers' changing tastes and needs. Customers want a more progressive restaurant experience than what McDonald's is currently offering, Easterbrook said.
He said the company needs to be "faster with innovation and smarter with taking risks."
"In the last five years the world has moved faster outside the business than inside," Easterbrook said. "The business cannot ignore what customers are saying when the message is clear: We’re not on our game."
3. The corporate structure is bloated and cumbersome. The company plans to strip away layers of management to streamline operations.
"Our existing organization is inefficient and lacks clear accountability," Easterbrook said. "We need to execute fewer things better."
4. McDonald's menu is too big, and it's slowing down service. The chain needs to "reduce complexity for customers and crew," Easterbrook said.
McDonald's menu has grown 42.4% in the past seven years, from 85 items in 2007 to 121 items today, according to The Wall Street Journal.
5. The company has had some marketing misses. Easterbrook said McDonald's has made the mistake of targeting millennials in its advertisements as if they are one homogeneous group. Going forward, the company will engage in "less sweeping talk of millennials as if they are one single group with shared attitudes," he said.
6. McDonald's lost control of the brand message. Easterbrook says the company needs to return "excitement" to the brand by engaging with more customers digitally and increasing transparency concerning the quality of its food.
"One thing we can do is make available the facts as they are today" about the food McDonald's serves "so people can make judgments based on reality instead of misconceptions," he said.
7. The company doesn't give enough power to franchisees.
Easterbrook repeatedly emphasized the importance of franchisees to the company's success.
"By putting more restaurants in the hands of our best owner/operators, we're getting closer to the communities and customers we serve," he said.
