Screwed by the Lawyers: McDonald's frequent heavy-handed attempts to supress dissent and critical comment. The star example is the "McDonald's Two" case in Britain, where the full weight of McD's corporate lawyers was used to attempt to crush two protesters drawing attention to the fast food company's shadier practices. The Two elected to fight back, dragging the case on for five long years, with most of the British and international press supporting the underdog, and every day in court brought more and more bad publicity. The case cost them millions with no realistic chance of recouping the costs from two unemployed activists....
more recently, McDonald's' attempt to ensure it was not just the "official" but the only "restaurant" providing food to staff and ticket-holders in the London Olympics. Their refusal to let the canteen serving Olympic contractors serve chips caused a lot of resentment and unrest.
What Could Have Been: Many attempts to introduce new McMenu items via "pilot programs" in test markets failed to catch on. If these items had caught on, McDonalds might be a different place today.
As mentioned in the Flawed Prototype entry on the main page, one of these failed attempts involved McPizza.
In the late 1970s, they attempted to draw in an adult demographic by instituting "The Big Mac Supper Club" — after 5 PM, they put checkered tablecloths over the plastic tables, dimmed the lights in the dining area somewhat, and played jazz music. When this attempt failed, they tried the same thing again some years later with their "Mac Tonight" campaign. When that failed, they tried introducing the Arch Deluxe, which was advertised as being revolting to young children (!). To this day, they've never succeeded in attracting the "sophisticated adult dining" audience.
The Angus Third Pounder line, introduced in 2009, and the Premium Chicken Sandwich line, introduced in 2006, have a more focused marketing campaign and are more subdued on the whole of their menu. These seemed to be working out until the Anguses were pulled in 2013.