By Jason Stemm (@NYCubsFan)
I love the Olympics. Every four years we see the most talented athletes in the world compete, hoping their skill, timing and focus converge at just the right moment to be a champion. Restaurant operators are not new to this pressure to perform, even if the stakes aren’t quite as high as they are on the world stage. Of course getting a meal out hot or making sure the coffee lid is on tight before handing it through the drive-thru window doesn’t provide the same pressure (or reward), they do have the expectation to consistently perform for their customers.
No QSR is more synonymous with the Olympics than McDonald’s, and the golden arches could learn something from the gold-medal-winning U.S. women’s gymnastics team: Focus. For years these ladies have dedicated their lives to a narrow discipline to do it better than anyone else. McKayla Maroney isn’t flying off the vault then over to the beach volleyball court to team up with Misty May. But over recent decades, McDonald’s has lost that focus as a value-driven burger joint and let other specialists, such as Chipotle and Five Guys, rise up the rankings and win market share.
It started when they added premium burgers like the Big Mac, then expanding their menu to breakfast. Salads followed in the 90’s, and in recent years, smoothies and gourmet coffee have been added. As they try to meet every customer’s needs, they have lost the focus that made them so profitable.
Conversely, specialists have found another way to offer customers choice, through customization. Chipotle claims that there are over 60,000 different combinations for a customer to build their meal from a line of 16 ingredients. If you travel to Texas and enter a FREEBIRDS, you will have 2.2 trillion different burrito combinations to choose from. On the burger side, no concept is hotter than Five Guys, where customization is encouraged. Beyond the basic burger options are 15 free toppings that offer 250,000 burger combinations. I guess McDonald’s is going to have to come up with some more menu items to compete.
It looks like Subway is beginning to lose focus. They were the first concept to really run with on the spot customization by customers, and were able to establish themselves as a value brand with the tremendous success of the $5 foot long promotion. It coincided with a tough economic situation and drew in customers allowing the chain to surpass McDonald’s in total locations. Since then, Subway has introduced a line of premium subs and expanded into breakfast. Sound familiar?
In its effort for consistency, McDonald’s has not had a history of customization. Just ask for them to hold the pickles during a Manhattan lunch rush and enjoy the glare you are likely to receive. They have intentionally tried to minimize the amount of assembly needed in each unit in an effort to maximize speed, consistency and experience.
McDonald’s has struggled while its main rivals, Wendy’s and Burger King, have enjoyed strong 2Q sales. I like to think it is due in large part to the baked sweet potato and sweet potato fries they have respectively added to their menu. They have both stayed closer to their brand focus and customer expectations with menu expansions. LTO items like the Son of a Baconator and Bacon Sundae have helped add excitement and traffic. The real growth in QSR, however, will continue to be the concepts that have a laser focus and offer both customization and consistency. If someone wants a salad they will go to Saladworks and create their own from over 50 ingredients rather than picking one of the ten salads that McDonald’s offers.
As the Olympics move into their second week, and the track and field events begin, hopefully Don Thompson will focus more on the marathoners than the decathletes. If recent comments about his focus on chicken are any indication, he does show that he is looking at the long-term picture. They are too far down the road to go back to a value burger joint, but they can continue to focus on being a value QSR operator.