Opinion

Hope for the McMainstream

20 October, 2017 Share socially

by Dave Ralph, Senior Strategist, London

The announcement last week of a surge in earnings for McDonalds, off the back of years of declining performance up until 2015, is further evidence that the turnaround for this global behemoth is well and truly underway. But it’s also a really positive story for all those mid-market brands who are feeling the pinch from artisan-local-hipster-prem-luxe competitors.

The good news: There is hope for these brands.

The tough news: They will have to change the way they operate, innovate and communicate.

How can other brands in the squeezed middle learn from McDonald’s approach? Firstly, to make change requires investment. Rationalising a product portfolio of poorly performing sub-brands or considering a restructure of physical or digital assets can begin to create efficiencies and free up cash for investment.

What’s next, is to really understand the experience gap, between the experience your deliver now and the experience consumers expect or will want in the future. This will provide the necessary clarity to start adjusting your offer, one department or business unit at a time – the approach that McDonald’s took.

We use a 3Cs model (Choose, Connect, Commit) to map future product and service experiences from a consumer-centric perspective. Creating this with consumers or consumer insight, and including invested leaders across the business, is really the best way to create a roadmap of consumer-centric priorities on which to focus. 

The message is clear we are not on our game … We must improve, or we will be selling our customers short and leaving open opportunities for competitors.
Steve Easterbrook
President of McDonald’s, 2015

These types of public announcements are not always followed by true change of status quo. Often the CEO doesn’t get a chance to implement the required grand plans. But in the case of McDonald’s, Steve and his global team really did rip up the strategic plan and start again. Just three examples of major changes that McDonald’s has implemented since 2015 are:

  • Reorienting its business away from store ownership to increase its franchisee footprint, effectively shrinking company overheads and freeing up capital to invest
  • Rethinking its menu pricing and offer, moving to a value/premium product mix and translating regionally successful concepts into other markets, such as Australia’s ‘Dinner Box’.
  • Embarking on a series of transparency campaigns and product sourcing changes to address long-standing quality concerns – and bringing these new stories to life in award winning ways.

These examples show that McDonald’s (finally) addressed consumer complaints with tangible business changes and world-first innovations, rather than just communications campaigns. The experience of walking into McDonald’s today is an ever-changing look ahead to where fast-food is going. It feels contemporary, connected with food and digital trends. You are buying from a leader in fast-food once again.  

The takeaway? (pun intended)

Be prepared to invest in innovation in order to change. Identify your experience gap. Create new consumer-centric experiences across a complete customer journey (Choose, Connect, Commit). Prioritize the solutions. Then win the mandate to implement them fully.