BurgerBusiness.com occasionally invites outside voices and opinions if they command respect. Barry Klein, who was a marketing executive at McDonald’s in the 1970s, wrote the essay below for BurgerBusiness.com. He created the Ronald McDonald character and helped craft the classic “You Deserve A Break Today” campaign. Klein also spent five years as a McDonald’s franchisee in New York City before returning to marketing as a senior VP at Wells Rich Greene in Los Angeles. There he worked on campaigns for Jack in the box and others. He currently works in Chicago as a marketing consultant. His opinions are his own. Reactions can be left here or sent to Barry at firstname.lastname@example.org.
It was gratifying to be part of the early growth of the McDonald’s brand. Over the years, most burger-business career practitioners have been astounded by this icon’s ability to serve more and more people around the world tasty, fulfilling food that is affordable, convenient, and even preferred in many cases. Along the way, there have been many successes and a few bumps in the road. But the successes have far outweighed the slips, which is why the company has become the gold standard of the restaurant industry.
Everyone knows that most business is cyclical, with periods of high and low results, especially in retail categories, where beating last year often depends on how good business was then. When a company has a long string of increased sales and profits, that company is criticized if the results don’t continue upward. McDonald’s is currently in the position of recording relatively flat comparable store volume growth, after an unusually long period of year-to-year increases. Nearly all the reports on its strategies are negative, from Wall Street, franchisees and the press.
But let’s look at a few of the critical darts being thrown now at McDonald’s:
• Too many limited time offers are bogging down preparation times and slowing service. Do customers care? Fast casual has proven that people will wait a bit longer to get tastes they want. McDonald’s is addressing preparation problems by modifying kitchen layout and alignment.
• Store profitability is eroding. If there are more transactions from new tastes, it usually means more dollars on the bottom line. Whether the new product brought more customers should have been learned in test markets.
• Dollar Menu makes customers avoid higher-priced items. Is anyone willing to eliminate the Dollar Menu (now Dollar Menu & More)? Again, customer count should increase if more people come to try the new item.
• LTO products have been overdone, and don’t work to increase sales with such a broad menu. Simply not true. Consumers will always want to try a new taste that sounds good to them.
• New products are rolling out without successful tests. Doubtful. McDonald’s system for testing new products is quite sophisticated and thorough. If the current pressure for new ideas has changed, shortened, or diluted the standards of the testing protocol, there might be a need for greater discipline.
My questions would be: Are the results being fully reported in detail? Is the strategic thinking that triggers the product ideas focused and innovative? How are the battles between creativity and operations resolved?
• Not enough healthy menu choices. Very few people will visit McDonald’s for healthy food choices. The opinion here is that there should be enough items to satisfy the “veto” vote (one person in the party has to have a salad or the like), but it will take a miracle product for McDonald’s to attract a large number of people who want better-for-you food. Focus on all the other reasons to buy here, because there are many fewer occasions when bland, boring food is acceptable. Interesting question: What has happened to sales of Happy Meals since they were made “healthier”?
• Competition is attractive, too. No doubt. Consumer choices have proliferated geometrically, and their convenience, overall experience, value and other factors have come close to McDonald’s. Competitors’ consumer communications have improved dramatically, and they are taking visits from McDonald’s. With the resources McDonald’s can call upon and the sheer location advantage, don’t bet against Big Mac.
None of these current issues is insurmountable, and I believe that they will be worked out satisfactorily. Has anyone considered the successes of the previous years, when the store volumes and the stock price rose so substantially after a period of gloom and doom similar to the current situation? That didn’t happen by accident. The people who manage the business used their well-developed experience and nose-to-the-grindstone work ethic to achieve those results. Yes, some of those people are not there any more. But does anyone believe that the current management is less experienced or less dedicated to making the business grow? What is happening currently is a temporary setback, which can and will be corrected with the expertise and persistence (Ray Kroc’s favorite word) that are hallmarks of McDonald’s way of doing business.
How about some encouraging words for CEO Don Thompson and the rest of the people who are fighting the missiles coming from all directions? Sales are even…not down…in a very difficult environment. Give them the break they deserve!