Therefore, in the face of the current sharp decline in sales and net profit, it is more inclined to believe that this is not simply due to the competition between the two companies, but that they are jointly facing severe challenges from their own internal and external environment. Next, I will take the example of McDonald’s performance in the Chinese market and delve into the complex factors behind this phenomenon.

Purchasing power and productivity are often seen as key factors that directly affect sales. Although McDonald’s has aggressively expanded globally in recent years, especially in the Chinese market, adding 925 new stores in 2023, and investing heavily in supply chain optimization and digital transformation, demonstrating strong productivity, the downward trend in sales points more to changes in consumer purchasing power.

Analyzing the influencing factors of consumers’ purchasing power, they can be roughly divided into two categories: first, the decline in purchase intention caused by McDonald’s internal problems; The second is the role of external non-self-factors. Internally, McDonald’s seems to have failed to adequately meet the increasingly diverse needs of consumers, including the limitations of product variety, the imprecise market positioning of the package mix, and the weakening of product value in the minds of consumers. Originally, McDonald’s attracted a large number of customers with its fast and convenient catering service and clear consumer group positioning, and its high-cost performance was an important factor in maintaining long-term customer loyalty. Recently, however, the balance between these factors seems to have been upset, causing consumers to reduce their spending on McDonald’s.

Specifically, even if McDonald’s has implemented short-term low-price promotions, the effect has gradually diminished over time. On the one hand, the increase in food prices during the non-preferential period makes consumers more sensitive to price changes, and short-term discounts are difficult to offset the negative impact of overall price increases. On the other hand, with the popularization of the concept of healthy eating, if McDonald’s fails to strengthen its differentiated competitive advantages in terms of product variety and quality, its original market attractiveness will naturally weaken.

Therefore, in order to revitalize sales, McDonald’s not only needs to adjust its product strategy and enhance product value, but also needs to build a sustainable governance system and a sound internal control mechanism. In this way, companies can quickly identify and respond to internal problems to remain competitive in a competitive market environment.

At the same time, the decline in sales is not entirely attributable to the company’s own problems, and the negative impact of the external environment cannot be ignored. The rapid development of China’s fast-food industry has intensified competition in the same industry, further fragmented market share, and challenged the market positioning of companies such as McDonald’s. Especially with the strong rise of emerging brands such as Wallace, Tustin, and China Burger, especially Wallace, which has a huge store network in the sinking market, which provides consumers with more choices in the economic downturn, making them more demanding and prudent in their choices.

To fierce competition in the same industry, frequent geopolitical risks, natural disasters and inflation due to global economic fluctuations in recent years have all set up barriers for consumers to continue to choose fast food with generally rising prices. The combination of these factors has made the fast-food industry face unprecedented challenges.

To cope with this situation, McDonald’s needs to diversify its strategy. First of all, broaden the market, meet the needs of different consumers by increasing product diversity, and broaden the range of choices of consumers. Secondly, in terms of marketing methods, we should jump out of the traditional framework and no longer rely only on single promotions such as “$5 Value Package” and “Crazy Thursday”. Consistently low sales may fuel consumers’ expectations of low prices, and finding and establishing the stable value of a product in the minds of consumers is the key to achieving sustainable development.

In addition, the relationship between McDonald’s and KFC has gone beyond simple competition, and the two parties may be able to cooperate with each other through linkage or their own unique business strategies to jointly deal with the industry’s dilemma, which is not only an effective way to solve the current situation, but also a wise move for both parties to achieve mutual development. Through resource sharing and complementary advantages, the two are expected to open up new growth points in the fierce market competition.

By Han Gao