What are the current forces in the external environment that might affect McDonald’s strategy?

McDonald’s had announced on January 28, 2015, that Don Thompson would retire as president and chief executive at the end of February. He would be replaced by Steve Easterbrook, the firm’s chief branding officer. The abrupt exit came after the world’s largest restaurant chain posted one of its worst financial performances in years.

This was frustrating to many analysts, because McDonald’s had managed to show consistent growth in performance up to 2013, riding a surge in operating profits and stock price for almost a decade. Most of this could be attributed to the “Plan to Win,” which was first outlined by James R. Cantalupo, who had come out of retirement to guide McDonald’s after overexpansion had caused the chain to lose focus. The core of the plan was to increase sales at existing locations by improving the menu, refurbishing the outlets, and extending hours.

In spite of management changes, McDonald’s had remained committed to pushing on various aspects of this plan. The chain had continued to expand its menu over the years, with more sandwiches and salads. It also started to add snacks and drinks, two of the few areas where restaurant sales had still been growing in spite of the economic downturn. Its addition of specialty coffee, ice-cold frappes, and fruit smoothies in its newly added McCafes had helped boost the average spent by each customer and lured customers to its outlets for snacks during slower parts of the day.

Nevertheless, McDonald’s was aware that it was facing a rapidly fragmenting market, where consumers were looking for healthier and even more exotic foods. The chain was facing tougher competition from Burger King and Wendy’s, both of which had been adding to their menus and remodeling their outlets. McDonald’s had also lost ground with Millennials who were increasingly drawn to new designer burger outlets such as Five Guys and Shake Shack. At the same time, McDonald’s was also losing customers to fast-casual chains, such as Chipotle Mexican Grill and Panera Bread, which offered customized ordering and fresh ingredients. Many analysts therefore believed that the chain had to continue to work on its turnaround strategy in order to meet these challenges.

The prevailing belief was that when restaurants started to slide, it really took a lot to turn them around. Would McDonald’s be the exception? With the recent addition of the McCafe coffee line, fruit-based smoothies, and healthier offerings across the menu, McDonald’s was stretching its brand beyond its traditional money making burgers and fries. Would this allow McDonald’s to successfully compete against all of its rivals, since, especially in America, people just love their burgers?