Market View: Long Overdue 'Lay-Up' at McDonald's

Sept. 22, 2015
Waiting this long to make breakfast available all day carries a lesson for food and beverage processors.

I recently saw in USA Today the big news that McDonald's is going to start serving breakfast all day long. I thought to myself how could this be news? Is it so rare that a food company would create a product that consumers have been requesting for years?

I think the crucial question is "What took them so long?” It has been quite clear that breakfast sandwiches have become an all-day product. You can get almost any breakfast item at almost any traditional restaurant and almost any time of the day. I may be spoiled living in New Jersey, where we have diners that serve breakfast 24 hours a day, but still is this front-page news?

By the way, the article said the company would be introducing the all-day breakfast sandwich in about six weeks. Six weeks! Here is a company that is hurting for sales, and it's going to take six weeks to offer a product that they already serve until 11 am every day. In my opinion the answer is quite simple: McDonald's is really not driven by a desire to satisfy its customers. It's driven more by production.

Making breakfast sandwiches could interfere with the process of making hamburgers. Decisions in these behemoth companies must go through layers of administration to get approvals for anything. It is no doubt exacerbated by the fact that the franchisees have to approve many of the decisions that are made.

I'm sure McDonald's, like most other food companies, has plastered all over its lobby their mission statement which tells how they're totally driven to satisfy their customers. What saddens me is if you sit in the lobbies of any of these companies, most visitors snicker at these consumer-driven mission statements.

McDonald's is a classic example of a company that has done a great job at marketing to its target audience -- but it is difficult to grow any further or any faster within that same target group. McDonald's is for kids. Everything they do speaks to kids: kid’s meals, a spokesclown, playgrounds, washable furniture, etc. To move beyond this is clearly a challenge.

McDonald's previous efforts to reach other target audiences have generally failed. Remember the Arch Deluxe, innumerable adult meals, an emphasis on top-quality coffee, etc. Be honest, if an adult wants to go out and have a great hamburger or a nice fresh salad, they are not likely to say “Let’s go to McDonald's.”

On the other hand, breakfast sandwiches are clearly associated with McDonald's, even if the chain is not the originator of these breakfast treats. It made really good sense because breakfast was not necessarily a kid’s meal and did not have overlapping product profiles, like the Arch Deluxe and the kid’s meals.

Then why did it take so long for McDonald's to reach what appeared to be a very simple and obvious decision? Now, in defense of McDonald's, the decision was probably not as simple as it would appear to the outside observer. On the other hand, they already make breakfast sandwiches! In an environment where new products successes are less frequent, all-day breakfast sandwiches appear to be a “lay-up.”

It is my opinion that McDonald's, like so many other big food businesses, became more internally focused than externally focused. While food companies give lip service to being driven by the consumer, most companies are driven by internal metrics that affect production and profitability. It is this reason that many of the exciting new products that are in the market today come from smaller entrepreneurial companies. Those companies have little administrative red tape and have a strong commitment to satisfy a well-defined target audience.

It is the big food companies in America that brought us the tastiest, safest and cheapest food in the world. But if they are to continue they must realize that profit is the reward for satisfying the consumer, rather than the objective of any company. The mission statements lauding the consumer in every food company lobby are in fact the source of profits and growth. Unfortunately many of their executives must walk through the back door because they fail to see the solution to a lack of sales growth right on their own company’s wall.

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