Why McDonald’s Struggles Are a Good Thing

The year 2014 has not been kind to one of the biggest symbols of American capitalism. Last quarter, McDonald’s saw its U.S. sales fall 3 percent as profits tumbled 30 percent. It was the 12th straight month of falling sales at the fast food giant, which this summer posted its worst revenue decline in more than a decade.

But critics, including McDonald’s employees, see a silver lining. They are hoping the company’s financial troubles will force McDonald’s to rethink how it does business at a time when it needs to address a growing number of problems. Middle class and young consumers, for example, are turning away from Big Macs and toward perceived healthier items, like Chipotle’s big burritos. The company’s Chinese restaurants were buying from a sketchy supplier who trafficked in expired meats. McDonald’s also faces credible accusations of wage theft. And the company is up against a persistent, organized labor attack on the notoriously low wages paid by its franchise owners.

Marielle Crowley, 21, has worked at several McDonald’s locations in Milwaukee over the past eight years. Last week, he accused one McDonald’s franchise owner of wage theft. His situation was exacerbated by the fact that his employer appears to have avoided documenting his hours. “We were getting paid on [prepaid] debit cards. We didn’t have an option,” he told me. The owner apparently took advantage of low-income workers who lacked checking accounts for direct deposit. By paying Crowley and his fellow workers with prepaid debit cards, the owner was able to deny the workers a check stub. With no stub, the workers were unable to confirm how many hours they were getting paid for, which in turn made it impossible to see if they were getting paid for fewer hours than they worked.

Another benefit of prepaid debit cards to companies like McDonald’s is that they’re less expensive than cutting checks to employees. But the cards are costly to McDonald’s workers, whose already low wages are further eroded by fees to retrieve cash or even to leave their money on the card without making purchases. An employee of a Pennsylvania McDonald’s initiated a class action lawsuit after she was forced to take her wages via debit card.

The National Employment Law Project’s Arun Ivatury said wage theft “is rampant. It happens all the time. If you’re a low wage worker barely hanging on, it’s very difficult to approach a supervisor and complain about, and push for what you’re owed.”

Yet Crowley is not deterred. Currently he makes $8.75 an hour, but he’s trying to boost that figure with his involvement in the Fight for 15 labor campaign, which seeks to bring a $15-an-hour living wage to fast food and retail workers through protests and other efforts. “It sucks that their sales are down, but I hope they realize this is only the beginning. We’re going to keep fighting for what we believe in. . . which is a living wage and a union,” Crowley said.

McDonald’s is also taking heat for how it advertises to children. “They have taken a lot of the marketing tactics from big tobacco and applied them to their food marketing. It begins at the earliest age possible,” said Jesse Bragg of Corporate Accountability International, a 37-year-old watchdog group. There is evidence to support Bragg’s allegation. A new study from researchers at University of Illinois at Chicago and Arizona State University shows that fast food restaurant marketing disproportionately targets black children and rural children. But it’s not just unhealthy Happy Meals that are harming kids. Recently McDonald’s recalled 2.3 million hazardous Hello Kitty toys. Patting itself on the back in a press release, the company said it decided “to voluntarily recall a red whistle included with the Happy Meal Hello Kitty Birthday Lollipop Toy. . . after recently discovering that components of the whistle can detach, posing a choking and aspiration hazard to young children.”

To improve its battered image McDonald’s has recruited former MythBusters cast member Grant Imahara. Imahara is starring in a series of MythBusters type Youtube videos where he explains, for example, what goes into making a McRib. Imahara’s old show attracts a large and young audience. Bragg views this sly marketing campaign as a part of the problem. “They have a $1 billion dollar ad budget. Yet they have this intense opposition to raising the wages of their workers. They want to continue business as usual for them and not adjust to changes in society,” he said.

But business as usual is looking increasingly untenable for McDonald’s — not just among upset workers and ad watchers, but increasingly on Wall Street, as well.

A spokesperson for McDonald’s declined requests for comment.

Correction: February 2, 2016
An earlier version of this story misspelled Marielle Crowley’s name and inaccurately stated that he was a student at Milwaukee Area Technical College. We regret the errors.

Photo: M. Spencer Green/AP