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Mary Schmidt Business Builder & Renovator


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Can You Grow Out of (in) a Stagnant Market?

Mary Schmidt

May 12, 2015

Old McDonald's sign Maybe you can only sell so many burgers to a finite number of people who will buy them over and over…

Faced with Sagging Sales McDonald’s Chief Announces a Reorganization (NYT, 05/05/15)

I’ve been reading about McDonald’s trials and tribulations over a couple of years.  However, the behemoth company has been struggling with how to maintain stellar growth for much longer than that. Remember the “gourmet” sandwich flop?

This happened back in my corporate America days—after a long day I whipped through Mickey D’s drive-thru. Never my first (or even third choice) but it was there. It was (supposed to be) quick…and (I confess) I actually like their Filet o’Fish with the 1/2 slice of American cheese and the glop of tartar sauce.  I didn’t pay much attention to the menu board…and then when I opened the bag I was confronted with something on a big squishy potato bun. They’d gone upscale! I parked and marched into the store—in all my power suit glory—and demanded the sandwich I knew. It was no longer available. I was not happy—and I was the very demographic they were trying to attract.  It wasn’t long before they went back to the old sandwich.

And now they’ve announced a re-org—which is a standard for big corporations who have run out of ideas. (Been there. Done that. Never really helped.  Often hurt.)

“Investors and franchisees had been closely watching Steve Easterbrook, McDonald’s new chief executive, for details on how he intends to reverse years of lackluster growth at one of the world’s largest restaurant chains, perhaps with a revamped menu.

But the changes Mr. Easterbrook announced in a video message were largely operational.”

Yup. Changing those org charts will make all the difference. Pardon my snark, but I doubt even one customer would say they want more big-time execs heading new ops units. And there IS often a difference between what customers say they want and what they will actually buy (from you)... and did they ask their most loyal customers? Or did they do “focus groups” of the desired demographics (including people like—well—me? Personally, I can’t imagine any scenario where I’d start eating at McD’s on a regular basis.) Hmmm…

So, here’s an idea (question) for them: Why was McDonald’s so successful in the first place? It was fast. It was cheap. It was simple. A “bag o’ burgers” and shakes. Oh, and those french fries (which I still love, even as I can feel my face swelling from the salt…)

These days, it’s not particularly fast…or cheap…or simple.  And the company is continuing to add/change/tweak the menu.  To the consternation of their franchisees…cooking breakfast all day adds complexity and time, and the more “customization” the slower the service.  All while the core customers who want fast and cheap grow increasingly frustrated.

I’d submit the McDonald’s biggest competitor isn’t Chipotle or Shake Shack…or any of the other more “upscale” or “healthy” companies.  It’s their own corporate ego with totally unrealistic expectations the company can continue to grow for forever.  Shake Shack ain’t healthy; Chipotle isn’t cheap (or all that fast, even if there’s not a presidential candidate in line ahead of you.)...and the people who love SS aren’t going to switch to Mickey D’s because of a new bun (or—lord help us—even more chicken, with or without antibiotics, on the menu.) 


Back to the basics is a good place to start for any company faced with a stagnant, flat market. What worked? What works now? At what do we excel?  In McD’s case, I’d submit they do a deep dive into that drive-in biz including interviewing some people in the line….and send the four executives now heading up those new ops units out to do it (and to flip a few burgers.)  Do their best customers really want “gourmet” or “custom”—if it costs more and takes longer?

I could go on, but I’d have to send McDonald’s an invoice. wink

(And I buy a fish sandwich, with fries, about twice a year.)

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