A Blog by Jonathan Low


Mar 31, 2015

McDonalds' Brilliant Menu Change Could Actually Save It

It's not just that customers say they want this. Who cares what they think? Did Steve rely on their judgment when he introduced the iPod and the iPad?

No, it's that this plan is totally in sync with the zeitgeist - and the economy. Think of all the people who have dropped out of the workforce and are at home in their pjs, surfing the net for old pictures of Annette Funicello or the original members of Menudo. Who knows what time of day they think it is.

They may not even think of this as breakfast anymore. They just know its tasty and cheap. Reinventing the time-space continuum to sell fast food: now that's innovation. JL

Alison Griswold reports in Slate:

Customers have spoken clearly. They want the Egg McMuffin. They don’t want to be asked to dance for it. And they want to be able to order it any time—not just until 10:30 a.m. McDonald’s is probably ready to try anything at this point
The past two years were not McDonald’s finest. Sales declined; promotions fell flat; ugly labor disputes drew public ire. In January, Don Thompson stepped down as the company’s chief executive, and his replacement, Steve Easterbrook, was handed the monumental task of trying to turn the struggling chain around. Easterbrook finally might be onto a solution—in bacon, egg, and cheese form.
On Monday, McDonald’s said it will begin testing daylong breakfast—that means the Egg McMuffin, hash browns, and various other items—at certain restaurants near San Diego. Should the initial tests go well, the menu switch could end up being what McDonald’s desperately needs to get its business back on track. That’s because, by and large, people love McDonald’s breakfast. Matt Yglesias once wrote in Slate of the Sausage McMuffin With Egg: “Asking whether McDonald's can make a better breakfast sandwich than the Sausage McMuffin With Egg is a bit like asking whether God could make an object so massive that he couldn't move it.” Business Insider’s Sam Ro has declared a photo of an Egg McMuffin so “perfect” that it inspired him and two colleagues to order McDonald’s on Seamless.
In short, McDonald’s breakfast has somehow escaped the widespread consumer skepticism weighing down sales of most other items on the menu. It’s hard to know exactly why this is. Perhaps it’s because McDonald’s has been more successful at marketing its breakfast as fresh—as Thompson said last April, “we actually crack eggs.” Or maybe it’s because with breakfast, it’s easier to believe that marketing. As anyone who’s ever had an Egg McMuffin knows, it looks and tastes authentic in a way that the standard McDonald’s burger just doesn’t. Or maybe it’s simply that McDonald’s breakfast really does taste pretty good.
“Arguably, the two most craveable items on the McDonald’s menu are its French fries and breakfast items such as the various McMuffin permutations and the utterly delicious McGriddles,” Mark Kalinowski, an analyst at Janney Capital Markets, wrote in a Monday note to clients that announced the news of McDonald’s planned breakfast test. “Having those breakfast items available to sell all day would also serve as a reminder to customers (and the media ... and Wall Street ...) that McDonald’s does indeed have craveable food to sell.”
Whatever the reason, breakfast has remained a bright spot for the chain even as other sales have flailed. Breakfast makes up an estimated 25 percent of McDonald’s sales, which in 2014 would have translated to some $4.5 billion at company-operated restaurants. In 2012, food and restaurant research firm Technomic estimated the U.S. market for fast-food breakfast at $31.7 billion. Since then, breakfast sales have continued to grow, but competition has, too.
Considering how popular and successful McDonald’s breakfast is, it might seem odd that the company has historically offered it only until 10:30 a.m. The company says that’s because the grills in its kitchens aren’t big enough to accommodate both breakfast and lunch cooking. “Their equipment has been designed for efficiency,” says Darren Tristano, executive vice president at Technomic. “So you’re looking at taking a very efficient and space-confined kitchen, and looking at 14,000 stores, and how you’re going to increase the griddle space for breakfast and burgers. It’s a major challenge.”
That said, McDonald’s is probably ready to try anything at this point. “They’re in a funk right now and for the last two years,” Tristano says. “Any move that gives your customers what they want, when they want it ... is a strong and positive move.” For once, this seems like a case where customers have spoken clearly. They want the Egg McMuffin. They don’t want to be asked to dance for it. And they want to be able to order it any time—not just until 10:30 a.m.


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