M Dana Baldwin, Senior Consultant
In 2012, a new CEO took the reins at McDonalds. During his three years of leadership, McDonalds lost market share and profitability. Why did this happen? There are numerous reasons, and we will hit some of them here.
As the economic situation gradually improved in the US, it became obvious that McDonalds’ leadership in the fast food business was on shaky grounds. They were selling food that was not as healthy for consumers as some of their competitors. Their brand was a little tired, because they needed to introduce food items that younger people – Millennials—would prefer. There were more competitors in the market place than Burger King and Wendy’s. Five Guys, Shake Shack, Qdoba, Chipotle and others were expanding in the fast food market, with most of them offering healthier foods as well as some traditional products.
There is no substitute for having very good products. With the increasing emphasis on lower pricing going on in the market place at that time, price became the emphasis rather than taste and quality.
In the fast food business, introduction of new products can be a major factor to sustaining profitable business levels. McDonalds failed to do that. In fact, McDonalds’ last significant product introduction was McCafe’, which predated the new CEO’s regime. It is my opinion that consumers sensed the lack of commitment to new products, and gradually moved at least a part of their business to other providers.
The actions and inactions that occurred during this time hurt the McDonalds brand. In the past, McDonalds had been known for good food, good quick service and good prices. By the early teens of this century, the food had become very ordinary and price became the principal driver. Ronald McDonald was nearly invisible, food quality was ordinary, and, as a result non-differentiating, plus the atmosphere was not inviting. McDonalds had lost their way in the market place.
Have you? What is the health of your brand? Are you like McDonalds, trying to ride a crest of success in the marketplace? Sustaining that success into the future requires not only keeping the good things going, but also understanding and responding to the shifts in customer tastes and the competitive landscape. Sound strategic planning makes that happen. That is our specialty. Contact me at email@example.com or at 616-575-3193 for help in building your strategic plan for the future.
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M. Dana Baldwin is a Senior Consultant with Center for Simplified Strategic Planning, Inc. He can be reached by email at: firstname.lastname@example.org
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