It seems like every day there is a new burger startup. Companies are springing up in this space all over the country, and they are eating into the market share of traditional burger giant McDonald's (MCD – Analyst Report).

MCD is being left in the dust by a number of upstarts that are either offering arguably better burgers with more choices, or by restaurants that feature healthier ingredients. McDonald's has tried to revitalize its brand in recent months, but it has little luck overall. Instead, the company continues to flounder, and looks to remain in trouble thanks to the uncertain direction MCD will head in next. 

Identity Crisis

One of the main problems for MCD right now is its lack of focus. The company is trying to go in too many different directions and its menu has become bloated as a result. Many of these new items are premium ones too, moving the company away from its low-cost roots.

However, consumers no longer associate MCD with either low costs or speed, two of the top reasons for going to McDonald's for many. With such a huge menu, staffs are having a difficult time keeping up, and especially so for a relatively high employee turnover business segment. And with a new lineup of premium chicken and beef focused products, not to mention items in the coffee and breakfast markets, it has lost its low cost appeal too.

This struggle comes at the worst possible time for MCD as everyone seems to be jumping into the burger game, assaulting McDonald's position from all angles. And then there are traditional rivals, like Burger King (BKW), which are also doing a much better job lately, and have found more success in establishing a turnaround.

Analyst Opinion

Analysts are universally against MCD and its near term prospects, at least if we look to recent earnings estimate revisions as a guide. Not a single estimate has gone higher for either the current year or the current quarter period, while at least 10 have gone down for both periods instead.

These declining estimates have also had a negative impact on the consensus estimate for MCD, as the consensus has fallen for the current quarter and the current year as well.  Current consensus numbers went from $1.35 to $1.21/share in just the past month, while we have seen a six cent decrease for the current year too. This has pushed expectations for MCD earnings to a 13.6% contraction for this quarter (yoy) and a 6.7% contraction for the full year (again, yoy).