The McDonald’s Dilemma

Keoni Cabral/Flickr.com

Keoni Cabral/Flickr.com

What are we supposed to be Lovin? As sales decline this is the question that McDonald’s needs to help us decide. McDonald’s has a big brand problem and an even bigger relevancy dilemma: should they compete head-to-head with new premium competitors or redefine fast food? To get consumers to start lovin’ again, they need to communicate why they exist and why we should care.

McDonald’s original innovation, the breakthrough, came from applying mass-production industrial technology to food service, and applying big marketing. This was perfect for the times. Americans believed that ingenuity and process were the answer to prosperity, and McDonald’s was the product of this era. And Americans consumed mass media, which fanned the flames. McDonald’s was modern, and modern was sexy. Customers ate the product with their families, but ate the idea of McDonald’s in the collective spirit of progress. The expectation seems to be that this original booster rocket of innovation created enough velocity to propel McDonald’s into the hearts of future generations.

Advertising built the brand

McDonald’s did not start life acting like a brand of today. Back then a brand was merely a logo and “trade dress”. McDonald’s has thrived as a marriage of operations and marketing. Their shear ubiquity, and recognizability has resulted in a giant, familiar company and a world-wide brand. As their signs used to celebrate “Billions and Billions served”… This required an emphasis on operations, efficiency, and market penetration. Hence the business model, but what’s the proposition? What exactly is the brand?

Through the years, McDonald’s has become a textbook example of what happens when advertising drives the brand. From the original “you deserve a break today” 44 years ago, to the 1970’s era child-friendly Ronald and friends characters, to today’s “Lovin’ it,” McDonald’s has created myriad media-based images of itself. We have developed our mental image of McDonald’s through a collection of tactics, versus a consistent, compelling brand idea. This is admittedly hindsight analysis. It worked spectacularly well for decades, but today, like most of us will experience ourselves, its youthful behavior has caused health issues in old age.

Speed, quality, price- pick any two

The axiom “speed, quality, price: pick any two” has adorned many shop walls, and it rings true in our own experiences. McDonald’s found the magic combination of speed and price, and was given a hall pass on quality due to its innovative delivery system. For many of us, they invented the way burgers and fries were supposed to taste.

Today consumers are presented with branded concepts focusing on a higher standard of quality, and we assume the operations can deliver. What is now known as fast-casual (i.e. Chipotle) is just a premium tier of fast food. Consumers pay more with both money and time, believing they are receiving a higher quality product. Fast casual approaches the market with a new denominator: experience per dollar versus the calories per dollar of traditional fast food. Meanwhile a new lower tier is thriving in convenience stores like Sheetz, Wawa, and Speedway in the east and Midwestern US. This fills the need with a lower socio-economic segment for speed and price, putting McDonald’s in a two front war and a dilemma.

Choose your battles

Much of what McDonald’s appears to be doing is fighting this two front war by trying to become broader, versus focusing. They need to pick a denominator, (experience per dollar versus calories per dollar) and start there. Testing table service from Australia and made-to-order “Build your Burger” kiosks in some US locations will further confuse, and looks desperate without a clear brand proposition driving brand clarity.

Today consumers want a concept, not a delivery system. What should we be lovin’ about McDonald’s that doesn’t rest on ancestor worship and the latest menu re-tooling? McDonald’s needs to mean something modern again, and that is going to be tough, but it’s not impossible.

Bill Chidley is a Partner and Co-Founder at ChangeUp. Creating Innovating Experiences that Drive Growth. http://www.changeupinc.com

Tweet the author at @chillbidley

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