McDonald’s Leads Quick Serve Food Category In Foot Traffic
Not only did McDonald's net a third of all QSR foot traffic in Q1, an xAd report found that its customers are the most loyal.
McDonald’s appears to be in full turnaround mode, as location marketplace xAd found that the company led 12 rival quick serve restaurants in foot traffic and loyalty during Q1. (Access the full report here.)
In April, McDonald’s beat Wall St. analysts’ expectations thanks to the introduction of its attention-getting “breakfast all-day” promotion and the February introduction of its “McPick 2” discounted menu options. As a result of those moves, McDonald’s same-store sales in the U.S rose 5 percent during the quarter, said Sarah Ohle, xAd’s Senior Director of Global Research and the lead author on the report.
But beyond that, McDonald’s has also been boosting its use of geo-targeting and mobile loyalty programs, as it continues to experiment with technologies like virtual reality to drive greater brand affinity among connected consumers.
As the xAd report shows, McDonald’s share of QSR foot traffic was 32 percent, dwarfing its closest rival, Starbucks, which claimed 11 percent of the category’s pie. Still, those figures also demonstrate the value of physical locations and scale, as McDonald’s has 36,000-plus outlets compared to Starbuck’s 23,768, xAd points out.
Location and Loyalty
The idea of “brand overlap” or connections between affinity for certain groups of brands in consumers’ minds seems important, the report shows. Interestingly, the affinity tends to go in one direction, suggesting that some brands are better at leveraging consumers’ interests better than others.
“For example we saw that 22 percent of Starbucks customers go to McDonalds, whereas only 8 percent of McDonalds customers go to Starbucks,” Ohle told GeoMarkting.
That prompts a question: how can location technology help realize those connections and drive foot-traffic?
“Currently marketers rely on their consumers to report on their behaviors, their preferences, and their favorite brands,” Ohle said. “The problem is that what people say doesn’t always line up with what they actually do. This is where foot traffic can help. Looking at the connections between real-world visitation patterns gives marketer actual behavior-based insights into the visitation patterns of their customers.”
For example, a comparison between Starbucks and its Dunkin’ Donuts shows that obvious similarities don’t translate to having a shared set of consumers.
“The two brands both serve coffee, but their customer bases do not overlap,” Ohle said. “In fact, less than 10 percent of consumers go to both QSRs. They also have different visitation patterns. Dunkin’ Donuts has a clear spike earlier in the morning, whereas Starbucks sees a more gradual visitation behavior thought out the day. So, when considering who their real competition is, it might be wise for the two brands to look at other QSRs where they have more of an observed overlap in foot traffic.”
A Strong Quarter For QSRs
While McDonald’s owns the largest share of foot traffic, all the brands featured in the report showed healthy visitation over the course of the quarter.
When looking at brand overlap, it was interesting to see the different segments that emerged.
“There are fast food variety seekers who frequent many different QSR brands, casual sit down diners who are more likely to go to brands like Chipotle and Panera, and brand loyalists who kind of just stick to what they know. Identifying these segments, or ‘location affinities,’ helps inform marketers of the preferences of their consumers and where the real opportunities and threats are.”
For example, take the notion that the “fast casual” category of sit-down restaurants like Chipotle, Chick-Fil-A, and Panera Bread, posed a serious threat to more traditional fast food restaurants. Not so, xAd found.
“While we saw some overlap between these brands, the report actually showed two distinct consumer profiles, indicating that they aren’t as much as a threat to each other’s’ business as originally thought,” Ohle said.