Will McDonald's Recognize These Early Warnings Signs - From the 1990s?

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It's very encouraging to hear that recent McDonald's Operator Pulse Surveys included Operator concerns about the growing complexity of the McDonald's restaurant operation and that Operators feel the regional staffs are "disconnected" from the restaurants.

It seems like yesterday that one of the components of the original Plan to Win was "Simplification". That was back when the McDonald's menu was about one-half the size it is today.

I don't know if a conscious decision to expand the menu exponentially was made at some point in time or the menu just evolved from a lack of discipline. McDonald's decision makers appear to believe that efficient operations are old hat and McDonald's restaurants must now be All Things to All People.

But don't the long-time operations people in McDonald's upper management know what they are doing to the capacity of the restaurants and the effectiveness of the people running the restaurants?

They might, but there are now so many Oak Brook decision makers who have no real restaurant experience that the people with real operations knowledge must get drowned by the new product pipeline and ignored. Or they may be told (by non-ops people) they are becoming obsolete and don't understand the realities of today's marketplace. That would be pretty intimidating.

In many ways McDonald's veterans have been to this movie before.

In the late 1990s McDonald's USA was on the ropes and Jack Greenberg staked the system's future on the Made For You cooking system. While millions of customers refused to wait in the long lines created by MFY no one would tell Jack Greenberg they'd created a huge problem. McDonald's USA went through another four years of sales problems and Operator failures.

At that time Greenberg was one of the few decision makers in McDonald's USA who didn't have decades of real restaurant experience. Because he lacked that operational background Greenberg apparently refused to listen to those who had such experience (or they were afraid to speak up).

Today, according to the corporate bios, there are only a couple of people on McDonald's upper management team who've ever run a real McDonald's restaurant. In addition there are the corporate marketing people running OPNAD who live in their own fantasy world and will never understand operations.

The danger is that these non-operations people are under intense pressure from Wall Street analysts who expect constant "Innovation". These analysts know McDonald's by the numbers but have no idea what they're seeing if they ever visit a McDonald's restaurant. I've been working with the analysts for more than 15 years and I know that they'll keep pushing for "Innovation" until McDonald's menu is the size of a Denny's menu.

And, while not as influential, the press is constantly hassling Oak Brook for "New Product News". The corporate PR people know that the easiest way to get a positive headline is to announce a new product line.

So who's going to tell the decision makers with no real restaurant experience about the damage they are doing to the growth prospects of McDonald's USA? It won't be anyone working in Oak Brook. Their career path will grind to a halt if they admit to their bosses that McDonald's can't be All Thing to All People.

It will have to be McDonald's Operators who stop the insanity through Co-Op and OPNAD decisions, surveys, public comments, and other activism. It's a long road back to a sensible menu and a workable kitchen system - only McDonald's Operators know the way.


Dick is raising some important issues here - about menu creep.

It is also relevant to understand what recent developments in the psychology of choice have revealed - variety is not the spice of life we thought it might be.

A properly managed shorter menu can give a consumer even more comfort than the constant introductions of new products.

Menu proliferation is usually marketing driven occurrence.

Marketers love new product introductions it's exciting and backed by a big budget ad campaign you usually sell a lot.

After the marketing investment is over and the menu has absorbed yet another new product the operators strain to deliver hot quality food quickly.

The myth guiding the QSR industry today is that people want "choice" over everything else. It would be fun to conduct an experiment in a high volume McDonald's that only has inside service, no drive-thru.

Break the service counter into two halves. A sign over the left hand side of the counter says, "Have it your way - special orders don't upset us". Over the right hand side of the counter a sign says "Express Service - Limited Menu - Have It Our Way".

I think 3 out of 5 customers would chose the express side of the counter. Maybe 4 out of 5.

I like that: "Have it Our Way"!

Hardee's had the same problem in 1990's. Every LTO was so loved that it became a regular menu offering and an operational burden.

I do like the "Have it our Way" idea!

  • user-pic Chris Harrison | October 2, 2013 4:19 PM | Reply
  • The owner operators rarely speak up because they know that disagreeing with the corporate direction will effect their ability to expand the number of units they could operate. Regional Managers don't appreciate the "trouble makers", even if these operators make sense. Therefore, very few express themselves truthfully for fear of retribution.
    As for lack of operational experience at the top corporate level, it is not logical to put someone who had never been in combat as commander of the an army.

    Menu creep is more of an operator issue than a marketing one. The 20/80 discipline is tough to follow in the face of same-store sales pressure. McDonald's, much like many restaurants, is under intense pressure to perform domestically.

    Marketing folks will always have new ideas to please customers. It's up to the operations "experts" to decide what fits into the restaurants and what does not fit. You're right about the pressure for same store sales increases. At McDonald's increasing menu complexity and a broken operating platform is going to retard sale store sales growth.

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    This page contains a single entry by Richard Adams published on September 30, 2013 2:13 PM.

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