January 15, 2015

How Anheuser-Busch and McDonald’s Are Trying to Win Over Millennials

Burgers & Beer - Technomic


Anonymous said...

MCDs problem is slow service due to an extremely bloated menu. But Don T and friends can't see that and are looking for a marketing silver bullet which does not exist. I'm dumping my stock now before it falls to $13 like it did twelve years ago

Anonymous said...

McDonald's is a financially healthy company, but its business model is broken and in desperate needing of a fixing. Alas, merely changing the service style is not the answer and could, in fact, create additional friction within the franchise system.

More importantly, McDonald's does not have a Millennial problem, as it hinted . The real issue is the food it is serving. Food that is, for the most part, inferior to that of its competitors. It simply doesn't resonate with consumers, and it will take much more than a "myth buster" for this to change.

McDonald's recent earnings call lacked clarity. To their credit, management is trying to stem the sales decline and even conveyed a sense of urgency in doing so. The issue, however, is that management can't properly communicate what the actual problem is, rendering their solution haphazard. But, perhaps more concerning is the reactionary nature of these initiatives.

Both management and analysts alike were focused on the fact that Millennials are skipping out on McDonald's to go to chains such as Chipotle. Sonic reported a +4.6% same-store sales increase and, interestingly enough, didn't mention the word Millennials once on the earnings call.

Wendy's, another brand that has been resonating lately, isn't particularly focused on Millennials either. Why then is it necessary for McDonald's to pin its troubles on Millennials? The company's issues run far deeper than this and it will take some serious soul-searching for it to regain the momentum it once had.

The message sent by Corp to the McDonald's franchise system was loud and clear: we will do what it takes to grow sales and you better get on board. The current plan, as it stands, will be very expensive for franchisees and will not impact sales until sometime in 2016. It also fails to address the issues that have been plaguing the system for the better part of the past three years.

Anonymous said...

McDonald's CEO, Don Thompson, said : " The reality is we haven't been changing at the same rate as our customers' eating out expectations, or more specifically, their expectations of us at McDonald's. So we're changing, and we're changing aggressively as we refocus on building the business for the McDonald's system and for our shareholders."

We know why he said this - everyone wants to hear it. But what does he really mean?

While I am delighted to see management recognizes the need for change, I find it disingenuous that it has taken them this long to admit it. Same-store sales have been declining for three straight years, which it why we find it odd that management has finally realized that there is a problem.

Also of note is the company's commitment to having leading edge point-of-sale systems, mobile technology, and free Wi-Fi. This isn't a competitive advantage Nowadays, it's more like… normal.

The company has already tested a multiple order point strategy and self-order kiosks which, to their credit, have limited some of the front-of-counter confusion, but it is far from being the panacea.

If you recall, the made-for-you rollout was initially a disaster that took several years to get right. It makes sense, therefore, to assume that the cost and the installation of new technology will be a disrupting force within the McDonald's system.
MCD management officially announced they are accelerating the development of a new service style called, "Create Your Taste," which combines a custom premium burger platform with new service enhancements. According to Thompson, this new service experience will ultimately create the "McDonald's Experience of the Future." However, these initiatives are defensive and fail to see how they will meaningfully separate McDonald's from the competition.

Don Thompson is not a visionary and needs to be retired ASAP

Richard Adams said...

"we're changing aggressively" - Dangerous words coming from a man who's never run a restaurant. For me, this is an echo from the mid-1990s when Jack Greenberg spoke of "reinventing McDonald's". Another guy who lacked an operational background.
We know how that all worked out.

Richard Adams said...

As I've written before, this Millennial thing might be getting over-blown. I have two children in their early twenties and I've been using them as my in-house focus group all their lives, from the latest Happy Meal to McCafe. Based on my observations I've concluded:

A) Millennials are a little pickier about their food but more importantly,

B) They expect instantaneous service and refuse to stand in a line (except at the airport). This is one reason the percentage of sales going out the drive-thru continues to grow at QSRs.

McDonald's has a huge advantage here over Five Guys and Chipotle.

Anonymous said...

I was setting in the bleachers watching my grandson's soccer game the other evening. Several families sent some Fathers off to get and bring back food. They came back with food from several restaurants none of which was MCD.

What is it? Taste?, price?, convenience? something new? Any ideas?

Anonymous said...

The Millenials demographic cares about everything that we have a negative stigma attached to. The process and where the food comes from, how cows and chickens are treated, the dietary needs, workers and the wages they are paid, the charitable aspect of the brand and how the impacts on the enviornment. Perception is reality and the activism in this "hipster community" in many cases is leading the charge against us starting by voting with their feet.