Is McDonald’s Suffering from a Poor Product – or a Sweeping Change in Customer Tastes?

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McDonald’s has seen slipping sales numbers for a couple of years now. In response, management is playing with the menu and making other changes around the margins. But is that enough? Sure In-N-Out Burger and Sonic are growing and taking market share on the west coast, but could our taste for mass-produced burgers be steadily declining, taking Mickey D’s profits with it? Could the sun be setting on the golden arches – and on BK and other mass producers of burgers as well?

7 COMMENTS

  1. Great question! Time will certainly tell. McDonalds gets their experience feedback from hired mystery shoppers (rather than actual customers) I am told, much like QC in a factory. Perhaps they are fooled into believing their in-store experience is as good as their nemesis Chick fil A and their menu adaptations to changing demographics is as customer-centric as another nemesis, Panera Bread. Hamburger factories are governed by the logic of machines and not the logic of people. While a great quality outcome or product is vital to the customer’s definition of value, in today’s sensory world, the experience is even more important. Paraphrasing the words of the post-World War I song, “How ‘ya gonna keep ’em down on the farm, after they seen DisneyWorld?”

  2. It isn’t nearly so much the menu as the customer experience. Even with attempts such as McCafe, McDonald’s has increasingly become a food filling station for families with little kids, young adults, office workers in a hurry, and teenagers. To build on Chip’s song quote, I’d add, “How ya gonna keep ’em down on the farm, after they’ve seen the farm?” The same bland, commoditized product and bland, commoditized experience may appeal to a steadily-decreasing segment of the population, but it won’t build broader interest or perceived occasion value.

  3. Hey Chip & Michael – good to hear from you both! I perceive we’re seeing the early signs of a migration from fast food to sit down restaurants. The latter really suffered during the recession because many families (and individuals) could not afford anything but fast food. But now that some of them have more jingle in their pockets, they’re going “sit down” in increasing numbers. As the migration accelerates, we’ll likely see golden arches fall.

  4. Dick – your question intrigues me. The best answer I can give is ‘yes.’ I realize this might come across as glib, but that is not my intention. Products that don’t fit customer need are poor products.

    McDonald’s has many problems. There’s very little oxygen in the executive suite, and today the CEO is gasping for air in the form of revenue. But I think a sizable portion results from a culture that involves a) an inability to recognize significant trends, b) pervasive too-big-to-fail arrogance, and c) conservative risk taking. Put the three together, and you have a recipe for failure. A sure-fire way to join Kodak, American Motors, Circuit City, Polaroid, Blockbuster Video, and a long, long list of others.

  5. Hi Dick

    There have been a number of interesting commentaries setting out the myriad of different reasons for McDonalds current problems. See for example:
    The Economist
    When the Chips Are Down
    http://www.economist.com/news/business/21638115-after-long-run-success-worlds-largest-fast-food-chain-flounderingand-activist

    Part of the problem seems to be that McDonalds has moved away from its core ethos of simple, tasty, hot food served fast and has embraced a bewildering array of innovations, many of them detracting from the original ethos (which made McDonalds so successful). I like the new McCafe which serve much better coffee than Starbucks, in normal-sized portions at a reasonable price. But I do not like the self-service kiosk in McDonalds which makes everything so slow, particularly on a busy evening after a football game.

    There is some evidence that McDonalds is falling foul of Clayton Christensen’s classic disruptive innovation. As its menu has become much more complicated, up-market alternatives in the UK like Honest Burger, Byron and many others have boomed by offering a much simpler menu with much higher quality ingredients. (Super-taste Me!) And that changes people’s expectations. Although I like the coffee at McCafe, there are no longer any circumstances in which I could envision eating a BigMac at McDonalds!

    Graham Hill
    @grahamhill

  6. Hi Dick. Whilst McDonalds in the US continues to struggle, the UK business is thriving. It is actually a big CX success story – demonstrating the power of transformation and innovation – you can have a read of my thoughts on the UK business here – http://www.ijgolding.com/2014/06/20/pride-passion-and-process-three-components-that-drive-mcdonalds/

    Fundamentally, the UK market still likes the core product – however, it is imperative that the UK business learns from mistakes made on the other side. Maybe it is no surprise that the US business is now led by the man who used to lead the UK!

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