With its 60th anniversary on the horizon, McDonald’s Corp. is coping with perhaps the most severe crisis in its history.

The world’s biggest restaurant company has suffered 14 consecutive months of declining same-store sales at its 14,000 U.S. outlets (sales at stores that have been open for more than a year, the chief benchmark of a retailer’s performance).

The problem is not unique to McDonald’s core U.S. market, where same-store revenues fell a dismal 4.6 per cent last month. That period also saw a 2.2 per cent drop in global operations, including Canada, where Tim Hortons has eclipsed McDonald’s to become the top fast-food operator.

The $28 billion (U.S.) company’s profits are sharply down, including a 30 per cent drop in the latest quarter. Stock in the company, based in the Chicago suburb of Oak Brook, Ill., has slumped as well, and is down more than 7 per cent over the past year. By contrast, shares of archrival Burger King International Inc. have soared 63 per cent in that period.

McDonald’s response to its woes, unveiled this month, signals the wide extent of the chain’s problems.

Yes, a July article by Consumer Reports, the product-testing organization, was a shocker, revealing that in its survey of consumers, McDonald’s burgers ranked worst among 20 competitors.

But the problems at McD’s are more far-reaching than that. The chain suffers “menu creep,” a proliferation of new offerings. McD’s now offers 121 items, or 75 per cent increase in the past decade. The result: service at the world’s biggest “quick-serve” food operation has become notoriously slow.

In trying to address age-old criticisms over serving unhealthy food, McDonald’s has been adding the fresher and more nutritional menu items that critics have demanded. Yet these healthier items don’t sell especially well, because the traditional McDonald’s customer isn’t all that interested in salads, soups and McWraps.

McDonald’s continues to get more than 30 per cent of its revenues from just five items, some of which trace back to the origins of the company in 1955: Big Macs, plain hamburgers, cheeseburgers, McNuggets and fries.

The new items swell inventory costs, of course. And the McDonald’s workforce skews to young, inexperienced employees whose turnover rate is high and whose pay and benefits are low. Asking that workforce to adjust to the chain’s recently launched “Create Your Taste” line of custom-made meal items — which take as much as seven minutes to prepare, compared with just two minutes for traditional bestsellers — threatens to slow service even more.

And McD’s is also coping with unprecedented competition. As the chain has come to be seen by many prospective diners as passé, specialty and even gourmet chains including Chipotle Mexican Grill, Panera Bread, Shake Shack, SmashBurger and Five Guys are taking their toll on McDonald’s sales. So are veteran chains that have stepped up their games, including Wendys Co. and Burger King, which this month bought Tim Hortons. And most supermarket chains now offer nutritious ready-to-eat takeaway meals.

Making matters worse is that consumer spending power is at a low ebb. A report last month based on U.S. Federal Reserve Board statistics shows that median middle-class American household income, adjusting for inflation, is stuck where it was in 1969, 45 years ago.

That helps explain McD’s failed effort to get customers to trade up to its Mighty Wings. The giant wings were arguably good value. And gram for gram, poultry is one of the greatest sources of nutrition. But priced at $1 a wing, the item was way above the traditional McDonald’s customers’ notion of value.

McDonald’s, in short, has alienated existing customers while not attracting health-conscious ones. “In some of our markets the reality is that we haven’t been changing at the same rate as customers’ eating-out expectations,” concedes chief executive officer Don Thompson.

Predictions of doom are premature, to say the least, however.

McDonald’s still feeds 70 million people a day. Its share of the U.S. fast-food market, at 7.3 per cent, remains almost three times’ larger than its nearest rival, the privately owned Subway submarine-sandwich chain, even though Subway has more outlets (almost 43,000, to McD’s 36,000 worldwide). A rejuvenated Burger King claims a market share of just 1.7 per cent. On average, BK stores generate only $1.2 million in business a year, compared with McD’s $2.6 million.

None of its rivals can match McDonald’s $1 billion annual marketing budget. And for all its recent woes, McDonald’s stock has outperformed that of Warren Buffett’s Berkshire Hathaway Inc. conglomerate over the past 10 years, with a 184 per cent gain compared with the Oracle of Omaha’s 164 per cent gain.

There’s no shortage of king-of-the-hill companies that have been humbled, including Starbucks Corp., Gap Inc., Home Depot Inc. and Bank of America Corp. Each of those firms eventually recovered. Complacency was the main culprit in each crisis.

Fortunately for investors in McDonald’s, the firm’s top management has a sense of urgency about restoring the chain’s customer relevance.

“We’re not going to re-energize this business by taking incremental steps,” Mike Andres, head of U.S. operations at McDonald’s, said this month. A sweeping McD’s re-org includes a drastic reduction in menu items, and rolling out the “Create Your Taste” customized-meal initiative to 2,000 U.S. stores by next year.

The Canadian Harvey’s chain has a winning formula with its made-to-order burgers. Patrons have to wait a little longer, but their willingness to do so is what Andres is counting on with the “Create Your Taste” campaign. And with its high-turnover inventory, McDonald’s is assessing an unexploited advantage in its fresh-menu items. “Why do we need to have preservatives in our food?” Andres asks. “We probably don’t.”

Like all retailing, fast-food is faddish. The industry is a graveyard of Tex-Mex, gourmet fries, steak joints, and haddock purveyors, concepts that have come and gone over the past half-century while burger outlets remain the most durably popular of roadside attractions.

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Perhaps what McDonald’s needs most is a marketing re-think. McD’s failed to explain, for instance, that its Mighty Wings were great value. And it hasn’t pointed out that its Big Macs have fewer calories than Chipotle’s burritos, whose popularity is largely based on the questionable perception that they are more wholesome than burgers.

“McDonald’s food is genuinely good,” a former McD’s executive told Fortune in a recent, devastating critique of the firm’s woes. “But McDonald’s needs to tell that story to people who don’t blindly accept it.”

The Golden Arches may turn out to be one of the more compelling turnaround stories of the decade.

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