A great American brand wobbles

Sears, Roebuck and Company. The former retail giant was once among the progressive, revolutionary companies of the 20th century. Founded in 1893, Sears’ mail-order catalogs and formidable in-house brands Craftsman and Kenmore sent shivers up competitor’s spines. At the height of its glory, Chicago-based Sears was the world’s largest retailer.

Sears answered the trend of Americans moving to suburbia by opening brick-and-mortar stores to complement its innovative catalog business. The first retail location opened in Chicago in 1925. When shopping malls sprouted up post-World War II, Sears helped transform the way Americans shopped. In the 1960s, Sears accounted for 1% of America’s economy. In 1974, Sears’ brand image peaked when the company built the world’s tallest building, the muscular 110-story Sears Tower.

Who could have imagined that mighty Sears would fall from the heights of the Sears Tower to the depths of becoming business school fodder. As e-commerce took hold, Sears’ beloved catalog was rendered slow and old fashioned. Discount stores took chunks out of Sears, like lions feeding on a downed wildebeest. In 1989, Walmart surpassed Sears as America’s largest retailer.

In 1992, Sears moved headquarters to Hoffman Estates, Illinois, a suburb of Chicago. In a 2009 shocker, Sears sold naming rights for its tower to Willis Group Holdings. By 2018, it was game over when Sears filed for bankruptcy. Only a smattering of Sears retail outlets remains.

More embarrassment followed when Sears sold its 273-acre headquarters to Compass Datacenters, who demolished the headquarters in 2023. At one time unimaginable, today Sears is virtually non-existent.

The former Sears Tower (the tall building on the right) still dominates Chicago’s skyline. (Photo credit: The Weekly Opine)

McDonald’s facing headwinds

(Full disclosure, I worked at McDonald’s headquarters from 1995-2016, including managing the Monopoly at McDonald’s promotion – taking over after the stolen game piece scandal. I also ran the McDonald’s All American Games and managed various relationships with sports and entertainment entities, including collaborating with numerous celebrities.)

Long envied for its consistent, standout performance, McDonald’s feels stagnant. The brand built by the visionary genius of Ray Kroc, the financial wizardry of Harry Sonneborn, and the operations discipline of Fred Turner slugs along. However, headwinds buffet McDonald’s, which was founded by Kroc in 1955 in Des Plaines, Illinois.

As the affordability crisis persists McDonald’s should be winning big. Instead, the brand drifted away from the “V” in the brand’s QSC&V acronym (Quality, Service, Cleanliness & Value). In a difficult economy McDonald’s is usually favored as jittery Wall Street investors and consumers seek value. But during the past few years, McDonald’s business performance has been sluggish. Since Q4 2023, McD’s missed earnings-per-share forecasts 4 out of 10 quarters. And the stock price dropped after earnings announcements 6 out of 10 quarters.

In the past five months, McD’s stock plunged from $341/share to $262. Price-cautious, low-income consumers, for decades bellwethers regarding McDonald’s health, shy away due to the cost of a meal. A brand known for value became distracted, now under attack by traditional competitors and convenience stores. Globally, American icon McDonald’s could face consumer rejection because of the “ugly American” stereotype brought to life by the tariff-happy, warmongering Trump administration.

In 2023, McDonald’s introduced a handful of CosMc’s restaurants to test craft beverages and energy drinks. CosMc’s shut down last year. Some beverages were integrated into McDonald’s McCafe menu. Reportedly, McDonald’s relationship with long-time partner Coca Cola is strained, as the burger giant experiments with non-Coke beverages that appeal to health-conscious consumers.

(L) For some reason McDonald’s brass invited unpopular Trump to speak at a meeting. (R) Popular actor Ben Affleck says he eats a lot of McDonald’s food. (Photos credit: Euro News, Daily Mail)

Numerous social media posts express frustration with McDonald’s:

· “If they don’t have humans at the window, I won’t be there either” one person posted. (McDonald’s is testing AI to handle drive-thru ordering.)

· “They’ve already been pushing app ordering to the point that even inside you often can’t get anyone’s attention at the counter.” (I’ve experienced standing at the cash register being ignored by employees.)

· “If I walk in a place, and I’m forced to use a kiosk to order, I WALK OUT,” posted another angry customer.

· “I haven’t eaten at McDonald’s in years as I am put off by prices, quality, and kiosks.”

Recently, an undisclosed small-town McDonald’s restaurant displayed a sign reading “ENGLISH only! Please. Thank you!” Considering 20% of the U.S. population is Hispanic, some customers – Hispanic and non-Hispanic – will stop patronizing McDonald’s. In response, corporate officials offered a tepid statement: “McDonald’s are independently owned and operated franchises.”

Management made the eyebrow-raising decision to invite Trump to a summit in Washington, D.C., last fall. Unfortunately, Trump is associated with McDonald’s because of his affinity for its burgers and fries. (Numerous online memes depict Trump gorging on McDonald’s food.) Trump’s policies increased the cost of beef. And his incompetence opened the door for the cyclospora virus that negatively impacts businesses that sell sandwiches that include lettuce, e.g., Big Mac.

Back in the day, McDonald’s was gifted ‘cool factor’ when the Black community – the leading purveyors of American culture – affectionately dubbed the company “Mickey D’s.” The McDonald’s All American Games, a showcase for top high school hoops players (many of whom will star in the NBA or WNBA) adds a dash of brand hipness. Popular actor Ben Affleck says he eats at McDonald’s “all the time.” Very cool.

Given Trump’s unpopularity, it’s uncool for self-described family brand McDonald’s to dabble in a relationship with the 34x felon, adjudicated rapist, likely pedophile.

In 2018, McDonald’s moved its global headquarters from suburban Oak Brook, Illinois, to Chicago. (Photos credit: The Weekly Opine)

Movin’ on up?

Nearly a decade ago, like Sears did, McDonald’s left their longtime headquarters, located on a sprawling, idyllic campus in Oak Brook, Illinois. The Golden Arches relocated to Chicago’s West Loop, just blocks from Google’s Chicago offices.

McDonald’s move ostensibly was to raise the brand’s “cool” profile and attract hip, city talent to work for the company. Former CEO Steve Easterbrook orchestrated the move, convincing the board of directors to take the plunge. Employee reviews are mixed regarding the move.

No doubt, there are McDonald’s haters. But Mickey D’s owes no one an apology. Its restaurants employ hundreds of thousands, including young people experiencing employment for the first time. McDonald’s set the standard for uniformity in restaurant operations. McDonald’s has been a leader in promoting people of color and women to management positions, as well as becoming restaurant owner/operators. And Ronald McDonald House Charities provides a sanctuary for families facing serious childhood illnesses.

McDonald’s Corporation also holds an ace: land owner and/or building owner at the majority of its restaurants. (In 1982, McDonald’s eclipsed Sears to become the world’s largest owner of retail real estate.) McDonald’s is a financial juggernaut in large part because of its real estate portfolio. If somehow the restaurants closed, the company could survive as landlord, leasing or subleasing the land or buildings to new tenants.

Could McDonald’s become Sears? Unlikely, and I certainly hope not. However, management should heed the warning from Sears’ spectacular downfall:

There is no such thing as too big to fail.

COULD MCDONALD'S BECOME SEARS?