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Brands in crisis: McDonald's Reports 30% fall in profits 2014

Once one of the most successful players in the fast-food industry, McDonald's reported a 30% drop in profits for its 2014 third quarter results.  So, are we falling out of love with fast food or is there another explanation for the lower than expected profits?

Allyson Stewart-Allen explained that there are a number of factors at play.  Firstly, the brand is suffering from increased competition from the rapidly growing ‘fast casual dining’ sector, such as Pret a Manger, Chipotle and even supermarkets.

These new faces of food all offer readily available, high quality and less processed options than traditional fast-food chains. Consumers can literally pick the meal combination they want and effectively have a customised meal made to order: their meal, their way.

The profilerferation of casual dining is also evidence that dining out is no longer the rare treat that it once was.  People are opting to eat out more often and, for many, this means something as simple as popping in to their local supermarket and choosing a meal to eat there and then.

Affordability is also another key factor in the race to win market-share but as Allyson explains, ‘People aren’t just buying a meal. They are buying the opportunity to eat food when they want it without the time and hassle of having it in another place.”

Allyson also believes that, in developed economies, there is much greater awareness of the food industry and this is also playing a significant role in influencing where people choose to eat.  Consumers these days are likely to be tuned in to health issues, the quality of ingredients and how much processing has been involved.

And Allyson believes the competition is set to increase with more scope for food genres, from Chinese and Mexican through to sushi.  She pointed out that American chain, TacoBell, is set to make a UK come-back after a disappointing attempt first time round.

It’s clear McDonald's has a tough challenge ahead if it is to win back consumers and get back to its core offering of affordable, fast food.

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