As a ‘who’da thunk it’ moment in marketing history, it was a doozy. After 47 years of enticing most of the munchers on Planet Earth to chow down under the Golden Arches, mighty McDonald’s humbly posted its first-ever quarterly losses on Jan. 23.

The announcement was a shocker. Sure, 46 million customers per day, including three million Canadians, were still being served at 30,000-plus restaurants in more than 100 countries around the globe. And system-wide sales for the quarter were $10.5 billion (all figures in U.S. dollars), totaling an astronomical $41.5 billion for the year.

But the world’s largest restaurant chain had experienced a net quarterly loss of $343.8 million. This not only compared abysmally with a profit of $271 million a year ago, but was more than four times greater than projected in December, when global CEO Jack Greenberg announced the expected bad news, along with his own resignation.

North of the border, McDonald’s Canada ‘will be one of the largest growth markets for [the fast food company] worldwide in 2003’ for the fourth year in a row, says Toronto-based marketing VP Neil Everett. Sales at 1,300-odd Canadian restaurants grew 2% in 2002 to $2.28 billion. Between 80 and 100 new restaurants are projected to open, including a third Boston Market, and possibly a Chipotle (which serves Mexican fare), with no layoffs or closings expected. And service will be enhanced by the introduction of double-lane drive-throughs in some markets.

But elsewhere belt tightening is proceeding at a rapid clip, with layoffs and closures primarily in the U.S. and Japan. Pontifications are flying to the effect that assembly-line burgers and other typical McDonald’s fare are doomed because the children of most baby boomers are no longer in the back seat demanding Happy Meals.

Marketing guru Al Ries is not alone in believing that McDonald’s is a mature brand that has maxed out its markets and should now forget expansion and concentrate on restoring core values – especially efficient service.

Pundits are also pondering the implications for the entire QSR industry of a simmering ‘get healthy’ movement that’s so far seen four U.S. class action suits filed against McDonald’s for promoting obesity and other health problems (two suits have been denied by judges). Additionally, 750 schools in the Los Angeles area are getting rid of soft drink vending machines and considering the banning of all fatty snacks. And three hospitals in New York City are expected to toss out McDonald’s franchises.

The most serious head scratching concerns cut-throat competition and evolving trends in the entire fast-food industry, which pulls in $105 billion annually in the U.S. alone, but may simply be as over-saturated as most of its menu items and woefully behind the times.

Society is changing while McDonald’s-style chains are not, or at least not effectively, according to analysts who say that empty-nest baby boomers are tired of cooking, gen-Xers seldom do and both want healthier food choices when eating out. So they’re bypassing burger joints and increasingly patronizing the $5 billion ‘quick-casual’ niche – epitomized by the Richmond Heights, Mo.-based Panera Bread chain -which is projected to grow tenfold over the next decade.

McDonald’s is attempting to bridge this gap by adding partner brands including Boston Market, McCafés, Donato’s (pizza), Chipotle (Mexican) and Fazoli’s (Italian).

And in an ironic timeline, just weeks before ‘fessing up to its financial woes, McDonald’s launched two extravagantly anomalous experiments. In October, a boldly un-McDonald’s-like restaurant opened in Lincoln, Neb., offering table service and a ‘3’n’1′ menu with selections from a ‘Sandwich & Platter Shop,’ a ‘Bakery & Ice Cream Shop’ and McDonald’s’ usual fare.

A month before that, the largest McDonald’s in the U.S. opened in New York’s Times Square. The three-story, 300-seat unit resembles the marqueed façade and back stage of a Broadway theatre and features 38 monitors and flat-screen LCD panels to entertain customers with footage of Disney’s various theatrical productions.

But some say all this amounts to is rearranging deck chairs on the Titanic. Industry watchers seem to be deeply divided about exactly what’s ailing McDonald’s, which is currently considering a new branding campaign, and what kind of cures might be effective. Here’s a sampling of the diverse opinions currently being batted about.

Ian F. Thomas, retail analyst, Thomas Consultants, Vancouver

The demographic reality in this market is that baby boomer families have grown up and are now seeking newer and healthier food choices.

Reinventing itself will be easier said than done for McDonald’s because it is so iconic that it’s now becoming a victim of its own phenomenal success. Staging a comeback will have to start with asking some hard questions: Is the company too ubiquitous and homogenized? Are the stores too clinical and stereotyped? Do the customers want to be made to feel more special?

Some people say McDonald’s isn’t in the fast-food business so much as in the real estate business. Not too many retailers own their own real estate because it is too capital-intense. But I believe owning such strategic real estate is one of McDonald’s great strengths. However, McDonald’s should consider selling some of its real estate to bolster earnings.

Some turnaround strategies I see are: concentrate on grab-and-go takeaway dinners for time-poor families. Stop trying to please everybody, which ends up being confusing. Recreate loyalty by ingratiating McDonald’s to the consumer again. Return to feel-good advertising, like the warm and fuzzy ads being done by Kodak. Capitalize on retro and nostalgia, as exemplified by the current ‘Main Street’ phenomenon.

Ryan Mugford, group marketing manager, Xbox Canada, Toronto

Trying to be all things to all people means you’re probably becoming nothing to no one. It just dilutes your core competency and sets you up to be a competitive target, which is what I think McDonald’s is doing with its line extensions. The real reason people go to McDonald’s isn’t for a salad or a pita, it’s for a burger.

That said, I think the problems at McDonald’s are being caused not so much by what McDonald’s is doing wrong as by what other QSRs are doing better. Subway is a brilliant example. They attacked McDonald’s market share by doing a really good job of appealing to the core demographic McDonald’s has left behind. They asked 16-34 consumers what they wanted – which turned out to be healthy menu items, freshness and customization – and then built their marketing campaign around giving it to them. And they chose a real person as their icon and as a symbol of how Subway relates to its customers, [while] McDonald’s stuck with a clown. Until McDonald’s can relate to something outside of the kid market, it’s not going to make a successful comeback.

Would added emphasis on entertainment elements, as is being done in the new Broadway restaurant (see above) help to rescue McDonald’s? I don’t think so. It’s just another attempt to replicate the toy in the box on a larger scale, tapping into a fad rather than addressing fundamental issues. Sure, toys have been a powerful vehicle, as borrowed interest often is, but it’s not lasting because the children who insist on going to McDonald’s to get them grow up. And then the parents, who hated going there in the first place, stop coming.

We are in discussions right now with others in the QSR industry but if [any partnerships similar to Nintendo stations in some McDonald’s] happen, it will be with brands that align with where Xbox is coming from.

At the end of the day, McDonald’s has to do what another brand titan, Coca-Cola, did when it was in trouble: reexamine what the brand sensibility is and what the core attributes are and then focus only on what reinforces those equities.

Jennifer Goddard, co-CD, Marketel, Montreal

Judging from the advertising, the prognosis can’t be good. Here in Quebec anyway, the advertising mix is pretty much all over the map. The latest wrap spot (English) tells me I’ll be the hit of the office if I bring one back for lunch. They’ll be lining up at my cubicle. My cubicle? Ghastly how one word can define your entire user imagery.

Meanwhile, I see the pretty cool B&W Mini promotion spot (English and French) telling me I can win a Mini if I get, what is it – a Value Meal? I’m wondering if folks who eat Value Meals (and work in cubicles) can even afford the insurance on a Mini (check it out – it’s a whopper). This brand marriage, I suppose, was intended to elevate McDo’s image. I’m afraid it only serves to drag Mini’s down.

Which brings me to ‘There’s a little McDonald’s in everyone.’ That used to mean emotion. McDo used to own emotion – love, even – leveraging the classic outings of parents with their kids, playing with the toys, smiling at each other over fries….It was about the experience, not the lettuce.

The ultimate expression of this was the ‘J’M’ [‘I love’] series in Quebec, notably the Mona Lisa billboards. That got sidetracked by some unfortunate menu muddling, with McDo trying to be healthy, or trendy, or ethnic. The product offerings may have worked, but the brand identity suffered.

It’s sad that McDo has now resorted to endless appetite-appeal shots, just like everybody else. They used to be above all that and, at this point, it’s not very credible anyway. It seems to me that if McDo still knows what it’s core brand identity is, it’s not being true to itself. Get back to love, kids and burgers. Even if it’s out of sheer nostalgia, that’s got to be worth something.

Irma Zandl, president, The Zandl Group (youth marketing specialists), New York

McDonald’s’ popularity amongst young consumers continues to decline (down 22% over the last five years amongst eight- to 24-year-olds), while the ‘casual’ sector has increased in popularity, (up 45% in the same period of time), led by Applebee’s and Outback Steakhouse.

In exploring favourite foods of young consumers, the trending also favours more adventurous flavors than McDonald’s offers. Over the last five years, Mexican, Asian and seafood have shown traction, while pizza and pasta have peaked and burgers are static at 3%.

Our recommendations for McDonald’s are twofold. One: Focus on the existing McDonald’s customer and create the best experience for that diner. We suggest using Las Vegas as a model to build excitement and value – from frequently updated menu offerings, with perhaps more decadent desserts and side dishes, to interior and exterior design updates that really dial up the ‘wow’ factor.

Two: Develop entirely new restaurant concepts that are on trend for the increasing numbers of consumers who have moved on from fast food burger restaurants and will never return. Concepts to explore include ones that offer more sophistication, more ethnic flavors, more freshness and more healthy preparation and ingredients.