September 15, 2014

McDonald's Build-A-Burger

There is a daily drumbeat of media attention to the Build-A-Burger test being
conducted in Southern California. The press loves this story because it's a chance
to write about their fellow millennials wanting to “Have it Their Way”.

But too much attention to a test product can be a very bad thing for McDonald’s.
If the Build-A-Burger test does not get expanded nationally it will be a checkmark
in management's loss column and the headline will be, “Don Thompson fails with

When a product or concept test gets a lot of press it’s no longer a test, it becomes
a forgone conclusion.

This might be similar to the testing of McCafe. Oak Brook announced a challenge
to Starbucks before the testing of espresso coffee drinks. The test was conducted
in the state of Michigan and showed very little customer acceptance. But, Oak Brook
and a few McDonald’s Operators lied to the rest of the country about the results of
the test and espresso drinks went national in the spring of 2009. That year saw the
lowest sales increase of all the Skinner years because McDonald’s Operators wasted
their advertising budgets on espresso drinks instead of advertising food that sells.

The years 2007 and 2008 had been rough for Starbucks but the many millions spent
advertising McCafe gave them a boost in 2009 and they've been on a roll since.

Of course, trying to reinvent the McDonald’s operation is far more dangerous than
having an idle espresso machine. Especially when the people making the reinvention
decisions have never run a McDonald’s restaurant.

Here's today's Bloomberg article on Build-A-Burger



Anonymous said...

Our company is going in many directions at once. Where are we headed? No one knows.

Anonymous said...

Thompsons already failed quite badly. Whats one more failure. He needs to be REPLACED.

Richard Adams said...

Not to defend anyone in Oak Brook but everyone saw problems coming at the time Skinner retired.Things were already going soft.

What wasn't anticipated at that time was the ongoing strength of many of the smaller competitors.

But you have to be careful what you wish for. Is there a super star in McDonald’s management team waiting in the wings to take over? If there was a deep bench of super stars why did they have to go to a former employee for a USA president? – the first time in McDonald’s history.

Sure, there are plenty of lawyers and accountants in Oak Brook who think they could reinvent McDonald’s but is that really what Operators and investors want to happen?

Anonymous said...

Go outside and STEAL someone from another chain.

Richard Adams said...

Going outside sounds good in theory but there just are not that many people who could come in and take over a company the size of McDonald's. They have to know something about restaurants and must have some experience with franchising. That's a pretty short list if, there's a list at all.