The Wall Street Journal published an article this week highlighting a significant strategy shift from McDonald’s, noting that the company has lost 500 million orders in recent years. The market loss was due to a lack of understanding of its true customers and competitors. Other brands, such as Burger King, have gone through a similar transformation.
Instead of focusing on its burgers, McDonald’s tried to follow the healthy food trend with salads and healthier wraps. While this is a noble mission and can make sense looking at some broader industry trends, these products never caught on with its customer base. It wasn’t until last year that McDonald’s realized its core customer isn’t a healthy food fanatic–and that its true competition actually consists of classic fast food chains rather than healthier hotspots. Misreading its customer ended up being a multi-billion dollar lost revenue opportunity.
How did McDonald’s make this mistake and why did it take this long to identify? Could McDonald’s or other brands avoid this mistake in the future?
McDonald’s lost these visitors because it didn’t have access to the right market intelligence. The Wall Street Journal suggests that the strategic “reset” was made several years late, and almost exclusively on 2016 survey data—perhaps the largest customer survey endeavor of all time. Industry insiders know that obtaining this data through traditional means is often impractical, unreliable, and costly to due to the constraints of the traditional survey model. However, technological innovations are beginning to take hold of the market research industry as they have with every other field. In 2017, just one year after the McDonald’s customer survey initiative, there is significantly more behavioral data available to brands of quick-serve restaurants. These innovations can drastically increase the speed, efficiency, and sample size of market intelligence.
For example, blunders like those of McDonald’s can be avoided in the future by leveraging the massive customer journey dataset just released by Sense360. An analysis of the unique tastes of McDonald’s customers indicate that they are relatively disinterested in the healthy food movement heralded by other restaurants. Instead, McDonald’s customers genuinely love the classic burger joints. In fact, McDonald’s customers were 27% less likely to visit a Panera Bread, and 19% more likely to visit a Carl’s Junior, compared to a non-McDonald’s customer. Thus, instead of trying to push healthier products on to its consumers, McDonald’s would do better to strategically to position itself as more of a core fast food company.
The charts included below show the visit volume of McDonald’s customer vs. a non-customer across selected fast food and classic brands. The analysis uses a sample size of 4.9 million restaurant visits nationwide in February 2017:
Sense360’s data sheds compelling light on the taste preferences of McDonald’s consumers, suggesting that McDonald’s should be more concerned about attrition from core burger and fast food chain competitors than from health food restaurants.
As these insights become increasingly accessible, efficient, and robust, they allow consumer companies to adapt with increased speed and move in a more thoughtful and strategic direction.
Sense360 is an insights firm with a panel of over 2 million anonymous consumers and data on more than 150 million consumer trips a month. By understanding the visits and journeys of millions of people in the real-world, we are able to provide restaurants and retailers with detailed competitive and consumer insights.