Are You Loving It?

A BLOCK FROM MY APARTMENT BUILDING in northwest Washington, there was a McDonald's restaurant that catered to the elderly, a few homeless, and tourists from the nearby zoo. The wait was long and the service slow. There might have been only two or three employees in the kitchen putting all the orders together. Even at the height of the lunch rush there was never a sense of efficiency: By the time you received your order, it was already half wilted. After a while, the number of patrons dwindled to a handful. One day a few months ago, it closed.

A block south of my office, there was another McDonald's located in a dungeon-like food court at the Farragut North Metro stop. Here the lines were always long during the noon hour, though it didn't take forever to get your order. The problem was the quality. The food just didn't taste good. It was sloppily prepared. And then there was the matter of cleanliness. Bad enough you were in a basement level food court next to a train stop. But some of the workers didn't strike you as role models for hygiene. I noticed one swarthy server, in particular, whom many customers tried to avoid. He would mumble and constantly run his fingers through his long, stringy, and unkempt hair. His shirt often came undone and you'd be witness to his tucking it back in, his hands going deep down the front of his pants.

"You want fries with that?"

THIS FRANCHISE closed down as well. Both restaurants were the class of operations that new McDonald's CEO Jim Cantalupo deemed unacceptable. Before he took over in January 2003, the company was in free-fall: The frequent complaints of lousy service and poor quality led to a mass exodus and an average store gross that dropped 12 percent from 1995 to 2002. According to Forbes.com, "by the fourth quarter of [2002], the company had its first loss, $344 million, since first selling shares to the public in 1965. By New Year's Eve, its shares hit $16, a low not seen since 1995." Stock analysts were advising their clients not to buy any more shares of the fast-food giant, explaining that the more than 31,000 locations worldwide had saturated the market and were now eating into each other's profits.

Jim Cantalupo had already retired as president and CEO of McDonald's International in 2001 when the board of directors asked him to take to the helm. And out of a love for a corporation he joined in 1974, he took on a task many thought insurmountable. Nevertheless, over the last year, McDonald's has undergone something of a revolution.

Starting last May, same-store sales were back on the rise, capped off in February by a more than 20 percent increase--meaning 11 consecutive months of positive news that has jolted the stock to almost $30 a share. At an investor presentation earlier this month in New York, chief operating officer and president Charlie Bell explained how Cantalupo and his team "focused the entire McDonald's System on the five drivers of superior customer experience--people, products, place, price, and promotion--which will result in enduring profitable growth for McDonald's global business."

So what exactly was done? Whereas 1,250 McDonald's franchises opened in 2002, only 500 opened last year. And more than $700 million is being spent to improve some of the already existing stores which find themselves in deteriorating shape. Most striking is the announcement that by the end of the year, "Super-Sizing" will go the way of the McDLT and become a thing of the past. Some analysts insist that outside pressures forced McDonald's to cave in and no longer offer 7-ounce fries and 42-ounce drinks for a mere 39 cents extra. Obesity critics pointed out those Super Size fries add up to 610 calories while the extra-large vat of soda comes to 410 calories. There is also an upcoming documentary entitled Super Size Me, in which filmmaker Morgan Spurlock subsists on McDonald's for an entire month and gains more than 20 pounds. (But is the gain in fat or muscle?)

McDonald's, however, insists the phase-out is simply a "component of this overall menu simplification" (according to a press release) and calls it part of a "balanced lifestyle strategy." Either way, it seems to be working.