01/25/2015
McDonald's Returns to their Specific Edge.
What began as a hamburger joint in 1940 has wandered some distance from its passionate beginnings — and is hurting as a result. McDonald’s, the very epitome of what we understand to be “fast food,” now sells steak, egg and cheese bagels; sweet chili chicken wraps and chicken bacon clubhouse sandwiches — in addition to burgers.
The restaurant’s expanding-menu evolution — and the fact that its sales have plummeted in tandem with it — demonstrates how things can spin out of control when you lose sight of your Specific Edge.
Diversifying Causes McDonald’s Sales To Fall
In its latest financial statement, McDonald’s declared a 2.2 % drop in global sales, and a 5% drop in US sales, compared to the same period last year. It is the steepest fall McDonald’s has ever recorded. Indeed, the world’s biggest restaurant company has endured 14 consecutive months of declining same-store sales at its 14,000 US outlets.
Since McDonald’s has diversified, it appears, its business performance has actually worsened. McDonald’s has simultaneously overwhelmed its customers and damaged its Specific Edge: its ability to put out a quality product fast.
Menu Expansion Confuses Customers
The so-called “menu creep” is undeniable. The establishment now offers 121 items. That’s a 75 % increase over the last decade.
While the extra choices have driven up sales, they’ve also complicated the ordering process. Customers are now confronted with so much choice that the speed of service, group president for McDonald’s U.S. unit Mike Andres told investors in mid December, has suffered.
McDonald’s Shrinks Menu, Rediscovers Specific Edge
Still, company executives seem to understand that they’ve lost their way. In early December, they announced a plan to drastically scale back the number of items on McDonald’s US menus and use fewer ingredients in their food. Starting in January, menus now feature eight fewer food items and five fewer Extra Value Meals.
From the start, the company’s point of differentiation was its steadfast specialization with the burger. McDonalds was actually built on: quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time. The more items they added, the harder it was to deliver the big four. In more recent times, it has strayed from that emphasis. A return to its roots and a renewed commitment to its Specific Edge put it on the path for fresh success.
McDonald’s Positions Itself for Return-to-Basics Restart
Its recent challenges aside, McDonald’s still feeds 70 million people a day. It holds tight to a 7.3 percent share of the fast-food market in the United States – that’s almost three times more than its nearest rival, Subway. However, the hamburger category continues to grow, but not McDonalds. Those who are growing are those who are specializing – Five Guys and Shake Shack as examples. And they focus on great hamburgers.
With its menu contraction, McDonald’s is returning to the strategy that works and has refocused on its Specific Edge — a critical move in a marketplace as competitive as is the fast food industry.
And so the stage is set with promise for the company’s return to greatness. By harnessing its specialist beginnings, McDonald’s has identified the solution most likely to deliver success: delivering on a fast, quality, and classic all-American menu.
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