Shilpa Rosenberry, senior director, global consumer strategy at retail branding firm Daymon Worldwide, says McDonald’s has correctly identified the reasons behind their sales slide.
“They have fallen out of favour with younger consumers, whose tastes and preferences have changed. All consumers, but especially younger ones, are looking for fresher, less processed foods that are made with simple, real ingredients with proven positive attributes,” she says. “Moreover, they want to know what’s in their food, how it was made, and even who made it. So they really want nothing to do with industrial food processing. In many ways, McDonald’s represents everything they’re looking to steer away from.”
She explains that McDonald’s rivals such as Chipotle and Subway are also more transparent such as allowing customers to see how sandwiches are made. “It makes them more authentic,” Rosenberry explains. “Those messages say a lot to consumers who are savvier than ever and expect companies to be straight with them. Even when you look at “cleaner” burger companies like Shake Shack or Five Guys, they’re selling burgers and fries too, but they have managed to showcase their offerings as high quality eating experiences. Consumers have gravitated to that.”
She adds that personalization and digital technology can be key differentiators driving consumers to specific brands. But the quality of product is crucial.
“You can make it easier for consumers to get to you through online and mobile but if you don’t have the products to appeal to them, they will go elsewhere,” she says. “McDonald’s challenge will be not only meeting the needs of a changing consumer, but also keeping true to what their core consumer wants from them. I think they also need to work harder here in the US to get some of their cachet back.”
In short McDonald’s is slowly realising that it can no longer rely on its vast heritage and global recognition.
“There has been a satisfaction that they could stay the course and, with their massive presence and convenient proposition, they would continue to maintain relevance. I think there is a realization that the old way does not work and the brand needs to reinvent itself to appeal to today’s consumer,” she says. “I believe that they will need to find ways to really surprise and engage consumers and, in many ways, transform the experience consumers have with their brand. There is also a need to be more tailored to local preferences – targeted demographics, more focused offering, marketing and messaging. Consumers expect very personalized experiences today and McDonald’s will need to create that.”
Robert Passikoff, founder and president of Brand Keys is not optimistic that the turnaround will succeed. “The plan doesn’t address what the brand can actually sustain,” he says. “It was never a question of financial or production wherewithal for McDonald's, it was about what consumers were willing to believe about the brand and McDonald’s was never very good about measuring that.
“They were geniuses at seeing what the competition was doing and then doing that, but not what the consumer really expected. A kind of hamburger hubris.”
He says McDonald’s can’t rely on its heritage and history anymore partly because the brand looks damaged to today’s consumers. “McDonald’s does serve as a symbol,” he says. “Pretty much for mass-produced fatty, salty, hamburgers and French fries on the dollar-menu they invented. With consumer values moving in an opposite direction then just because you’re big doesn’t mean you can just reverse the trend. For a global brand it’s always difficult to put on the brakes and make the turn. Kind of like turning the Queen Mary around.”
He doesn’t expect sales to improve anytime soon: “Based on every measure of customer engagement and brand assessments in the US, none of the current programs would seem to meet customer expectations à la brand believability. When a customer says that they want healthy, nutritious food they can customize, is McDonald’s the first brand that springs to mind? My prediction is a resounding ‘no’.”
With so many brands out there that can deliver on that, why would you put McDonald’s on your list? It won’t happen for them no matter how many tablet-ordering systems they put into place.”
In tomorrow’s instalment of the McDonalds brand audit we hear from Larry Light is a former chief marketing officer at McDonald’s…