Growth Club
1851 Growth Club
Established Turnarounds of 2015
For these companies, you can most definitely call it a comeback.
If you Google “Great Turnarounds of 2015,” McDonald’s steals the show.
In September 2012, McDonald’s was hurting. Same-store sales in the US were down, its stock was sinking, and critiques of the business had sullied its once illustrious brand.
“The challenges facing McDonald’s come supersized,” TIME wrote in September of that year in a story headlined, Can McDonald’s Shape Up? “Its home market is all but saturated, its sterling reputation for fast, friendly service and cleanliness is tarnished, and customers are putting a growing premium on freshness and taste, neither of which McDonald’s is renowned for.”
The company ramped up its efforts to appeal to those tastes by offering new, hipper and healthier products. But the small changes didn’t appear to be working and sales continued to sink. In what Bloomberg termed, “McDonald’s Hamburger Hell,” the company suffered from complaints of bad customer service, a floundering CEO and disgruntled franchisees. In 2014, the same thing happened all over again—sales in the U.S. were down six quarters in a row, dropping seven percent. It didn’t stop there—within the first quarter of 2015, McDonald’s sales fell nearly $400 million, and the company announced it would close 350 poorly-performing stores in Japan, the U.S. and China.
Hungry for change, McDonald’s announced plans for an ambitious turnaround, and after its drawn-out slump, 2015 officially became the year of the brand’s comeback: McDonald’s shares hit an all-time high in October after the company reported that global same store sales jumped 4 percent in the third quarter following six consecutive quarters of flat or negative results.
“The progress we have made in a short amount of time gives me confidence we’re making the right moves to turn around our business and reposition McDonald’s as a modern, progressive burger company,” said CEO Steve Easterbrook to QSR Magazine earlier this month.
Easterbrook turned skeptics into believers with bold actions like rolling out all-day breakfast in the United States, boosting wages for hourly workers in company-owned restaurants and tweaking quality by starting the lengthy switch to antibiotic-free chicken. The company is also determined to correct many of its key mistakes of the past, including refining—yet improving—its bloated menu.
By focusing on better-quality products, new stores designs and new lines of management reporting globally, Easterbrook, who took over for Don Thompson in March, has infused the company with new energy and helped McDonald’s turn the corner.
“I have learned as an observer of McDonald’s and the restaurant industry for more than three decades that the company is filled with smart, focused, hard-working and dedicated people,” said Christopher Muller, a professor of hospitality at Boston University. “While they occasionally lose a step or two, they always seem to pick up the beat again and get back to leading the parade.”
McDonald’s isn’t the only company to see a turnaround this year. Check out a few other brands that made a comeback in 2015:
Domino’s
Domino’s has executed an epic turnaround. The company is opening hundreds of new locations, profits are soaring and Morgan Stanley recently named it the “leader in the U.S. delivery pizza.”
But just a few years ago, Domino’s was struggling to compete with Pizza Hut and Papa John’s. After the company introduced a new pizza recipe in 2009—along with other premium items—their better core product marked the beginning of a transition. The uptick in sales was also due in part to their better marketing efforts. Russell Weiner joined Domino’s from Pepsi six years ago in the midst of a massive sales decline. Since then, he has implemented a cheesy-good (and sometimes self-deprecating) marketing strategy that resonated with customers.
Choice Hotels
Choice Hotels International’s 2015 earnings show a company reaping the benefits of the strong hospitality sector, seeing both high revenues in the short term and good numbers reflecting the transformation of its Comfort Inn and Comfort Inn & Suites brands.
The Comfort Inna and Suits “rejuvenation” has helped drive a 40 percent increase in new domestic hotels contracts in total and a 50 percent increase for the Suites brand in particular. The new-build Comfort hotels also are larger and more revenue-intensive.
At the same time, Choice executives have removed hundreds of under-performing Comfort properties from the system to raise the overall quality of the existing stock. That number will reach 600 by year’s end.
Target
Target is on its way back. Shoppers are visiting the company’s stores more often and spending more on each trip, leading to a second-quarter net income that has more than tripled.
The upbeat report is evidence that the company’s efforts to spruce up its fashion department and other merchandise are paying off. The turnaround comes under the helm of CEO Brian Cornell, who has led the company for a year with marching order to reinvent the “cheap chic” retailer after a series of problems.
Target is also trying to reclaim its position as the place to go for “cheap chic” by placing a heavy emphasis on fashion, children’s goods and home products—areas that carry higher profit margins.
The company is investing in e-commerce and said it’s improving its shipping time by testing a program that will give online shoppers a precise delivery time, not a window. The bulk of estimates will be two or three business days, an improvement from the delivery window of seven to 10 days.
MORE STORIES LIKE THIS
NEXT ARTICLE
Featured Franchise News
Featured Brand News
