McDonald's Needs To Disrupt Fast Food...Again

McDonald’s reported dismal quarterly financial results earlier this week, as it contends with price hikes on ingredients and labor, along with nagging questions about its food quality, which are pushing its customers to better deals or fresher options from its competitors. McDonald’s still commands a huge “middle” between such alternatives, but it’s starting to look more like a muddle.

It’s hard to remember, but McDonald’s started out as the disruptor in its industry. Its innovations were many, ranging from standardized, efficient experience in menu and restaurant design, to great marketing. McDonald’s perfected, and then consistently improved the Holiday Inn model that allowed it to blow up thousands of quirky and sometimes risky hamburger stands, and replace them with food that was reliably good in restaurants that were consistently fine. This model generated profits hand over fist for many years.

In fact, McDonald’s competitors use its model for their branded offerings, albeit adapted differently. So now it needs to change the game, and disrupt its industry again. It’s in a uniquely good position to do so. Here’s how:

Don’t rely on digital “strategy” — McDonald’s is a technology company like it’s a money company; everycompany needs to use tech effectively, but tech is an enabler of strategy, not a substitute for it. So it’s disconcerting when its earnings press release talks about digital this and that as a “new global approach.” It opened a special office in San Francisco earlier this year to be “more plugged into the flow of ideas,” and a quick online search reveals a number of tests and projects intended to cater to a tech-savvy “disruptive” customer.

Really? Such innovation theater is fashionable for big companies, mostly because it’s trendy shorthand in lieu of more difficult operational heavy-lifting. It’s also misdirected: McDonald’s should put an incubator in Omaha and task it with disrupting hamburgers, not go looking for apps or other digital ephemera in Silicon Valley. Even the coolest touchscreen won’t make people want to buy food they didn’t already want to buy.

After all, this is the company that gave the Big Mac to the world, arguably the most popular and memorable fast food product in history. Where’s the Manhattan Project to do it again, or to systematize doing so regionally and regularly? All the talk about digital tech isn’t disruptive, it’s predictably also-ran.

A McDonald’s Big Mac hamburger (Photo credit: Wikipedia)

Reaffirm food quality and prices – The cost/value equation for many McDonald’s customers seems out of whack these days, as they can find similar options for less money, and slightly better ones for just a bit more. This equation has always been the most important, foundational aspect of the McDonald’s brand — not its golden arches, clown, or any number of memorable slogans — and the company has no future unless it can reaffirm its core product attributes of quality and price.

When the company passes on to its customers rising supply and labor costs, with no commensurate improvement in offering or taste, it’s literally daring them realize that its “Value Meal” isn’t so valuable anymore. Further, its marketing suggests that it thinks the problem is that consumers have got it all wrong on the quality side of the equation (like hiring a TV personality to spend his credibility correcting “misinformed” people via social media).

McDonald’s doesn’t have to apologize for what it sells, but it needs to take responsibility for what people think and do because of it. Reaffirming its quality and pricing messaging should be another Manhattan-style internal project, involving not just its marketing savants but store layout, process design, employee relations, and every other consumer touchpoint. Price increases shouldn’t be seen as inevitable, because margin and volume are not independent absolutes.

Disrupt everything else — OK, so McDonald’s is the Walmart of fast food, at least in terms of the breadth and depth of its influence on suppliers and consumers. It’s a giant inflection point, a lever between production and consumption; every single change can affect many, with the larger changes influencing far more businesses and people than any startup could hope to disrupt.

So it should do it…disrupt the industry completely, by flexing its resources muscles and embarking on changes that its competitors couldn’t copy or catch, and for which its customers would pay.

It could announce to its suppliers that its french fries are going to be not just the healthiest ever served, but cost less than less-healthful alternatives. It’s what Walmart did when it dared manufacturers to come up with a fluorescent lightbulb that was priced competitively with incandescents. Imagine if it raised the bar on its store environments, so the air recirculated in its outlets had some beneficial effect, or its seating was ergonomically superior to all others (or something)? Could it own the IP on these attributes so they could be tangible values of the brand?

Then, it could do so much more. What if McDonald’s decided that it would be the global leader on local sourcing, and figured out how to go beyond making menus different by region, and connected its offerings to local economic empowerment (which could also scream fresh)? What if it came up with ways to make employment not just a job, but a true, lifetime-impacting economic and social benefit, maybe through education, ongoing networks that allow current and former employees to support one another, etc.? What other national or global issues could it connect to in meaningful, inspiring ways?

It’s goal could be to change its industry from fast food to better food, in every which way people might define the word.

McDonald’s is uniquely positioned to deliver this sort of disruption, its brand and marketing goal could be similar to the vision Roberto Goizueta set for Coke back in the 1980s (I’m paraphrasing): McDonald’s should be a default choice for people who are hungry. Technology won’t do it, and righting the ship on food quality and pricing will only get it back in the game.

It needs to disrupt fast food…again.