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McDonald's Huge Wi-Fi Mistake


It should be emphasizing fast food instead of trying to be hip.

Is fast-food giant McDonald's (MCD) desperate for traffic?

Just a week ago, the house that Ronald built reported disappointing same-store sales numbers -- a bad sign for a company whose earnings reliability is only matched by its consistency in delivering hot fries.

A turnaround may not be in order just yet; McDonald's is making a major gamble to attract new customers by giving away free wi-fi service in its US stores. Reported by the Wall Street Journal, the initiative is aimed at transforming the average McDonald's from a mere fast-food joint into a "hang-out destination."

Ugh! The offering of free wi-fi service goes against everything that's great about McDonald's -- particularly the convenience factor.

Up until a few weeks ago, I was a very loyal McDonald's customer, devouring Southwest salads at various NYC locations once or twice a week. While my food was prepared perfectly exactly 100% of the time, once in a while it would be tough to find a seat.

Now what's going to happen when all these people with loafers show up with their Macbooks to play on Facebook all day long?

Offering free wi-fi will do nothing to build a bigger customer base for McDonald's. People looking to sit down and eat will find fewer empty seats, leaving them to go elsewhere. Those folks will be replaced by time-killers that are much less likely to spend money. And call me crazy, but there are already too many people hanging out at McDonald's doing nothing.

The free wi-fi model works in independent coffee shops because in a small place, people feel more obligated to buy something. When there's five or six tables, you can't help but buy something unless you're particularly shameless. In a place like McDonald's, they'll be happy to use the wi-fi, and they probably won't take fries with it.

For that simple reason, offering free wi-fi seems like a bad bet.

And from a bigger-picture perspective, I worry that McDonald's is fighting its own identity.

McDonald's should be emphasizing what it's good at -- kitchen logistics -- and forget trying to be hip. Few multi-billion dollar companies will ever be considered cool by the masses. A McDonald's store will never have the same cache as an Apple (AAPL) store.

If people want truly great fast food, they'll go to the almighty In-N-Out Burger. If they want to feel cool, they'll go to a coffee shop full of hipsters with nerdy glasses. But they won't go to McDonald's for those two things; McDonald's is all about fulfilling the need for speed, and it shouldn't shy away from that notion.

There's no doubt in my mind that when it comes to reliably serving up hot food fast, McDonald's blows the doors off all its competitors -- Wendy's (WEN) and Burger King (BKC) aren't even in the same universe. And that's what McDonald's needs to be talking about right now. Get out there and brag about how fast your food really is!

McDonald's may put the hurt on Starbucks (SBUX) with this move, but it will pay its own price if its stores become loaded with wi-fi-sucking cheapskates.
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