McDonald’s Owns ‘Quick And Easy’ Among QSR Customers — Rivals Need To Look Other Values To Compete
"Rather than follow McDonald's into value and convenience and fight them at their own game, other chains should consider hanging their hat on some of the other drivers that matter with QSR consumers," says an analysis by Sense360's Eli Pornoy.
Despite this past week’s salad recall at 3,000 McDonald’s locations across the U.S. the QSR chain has shown it can bounce back from negative news fairly rapidly.
And the chief reason appears to be McDonald’s singular focus on being clearly identified in the minds of QSR patrons as an emblem for quick, convenient service and low price points, according to a report by Sense360.
While that point is fairly obvious, Sense360’s report contains a corollary argument McDonald’s rivals would do well to understand: don’t try to compete with the brand on that fast and cheap terrain; McDonald’s owns the idea and brands should find another way to appeal to QSR customers as a result.
A Defined Identity
Its close identification with quickness at low cost also is what McDonald’s mobile strategy has been able to amplify. Over the past two years, McDonald’s approach has largely revolved around omnichannel convenience: making it easy for customers to order and get what they want as fast as possible, whether it’s via on-demand delivery or by mobile ordering and pickup.
“Across the McDonald’s system, value is foundational to our business and an integral part of our growth plan,” McDonald’s CEO Steve Easterbrook told analysts during the company’s Q1 2018 earnings call at the end of April. “Our strategic brand of iconic and relevant value platforms and high-impact deals drove traffic during the quarter. The $1, $2, $3 Dollar Menu is the platform that anchors our value strategy in the U.S. With the introduction of this menu at the start of the year, we’re offering customers choice and variety for a simplified menu at multiple price points.”
McDonald’s simplicity around service and prices that customers can reliably expect can’t be underestimated, particularly by its rivals, says Sense360 CEO and founder Eli Portnoy.
“I believe McDonald’s has done a great job of building a set of brand values around convenience, not just in terms of its marketing, but they have built ‘quick and easy’ deep within their core product,” Portnoy tells GeoMarketing. “They are everywhere, which means they are generally a close option. They are fast with orders. They have invested in kiosks and other ways to process orders faster. So while I do think ‘quick and easy’ is a material driver for the category as a whole, it matters even more for McDonald’s. And as a counter-example, when looking at data for Chick-fil-A, “quality and taste” is always a more meaningful driver.”
Who Are McDonald’s Main Customers?
Sense360’s panel of “millions of US devices” that allow it to collect data on over 100 million restaurant visits a month, coupled with a panel of 2 million users by triggering surveys based on where consumers went, fielded “a behaviorally targeted survey to 9,700 McDonald’s customers” in April 2018 and found that 35 percent of McDonald’s most frequent visitors fall into two out of 10 types of QSR customers.
About 19 percent were identified as “busy budgeters” — families on-the-go that have roughly three children and eat out more than most consumers — and “hardworking homebodies,” who care more about affordable options and have an average of two kids.
Both groups each represent roughly 11 percent of the U.S. population, yet the “busy budgeter” and “hardworking homebodies” each represent over 19 percent and 16 percent, respectively, of McDonald’s total visits.
“When asked why they chose to go to McDonald’s, convenience and value were reported at +11 percent the industry benchmark, adding further support to the persona visits insights shared earlier,” Sense360’s report says. “Additionally, quality and taste were well below the industry baseline by – 17 percent. Which isn’t surprising if it’s all about being ‘cheap and easy.'”
Once at the restaurant, Sense360 found that guests use a coupon 24 percent of the time — 5 percent higher than the industry average.
Also, 24 percent (vs. 14 percent industry average) of McDonald’s customers use the brand’s app during the customer journey (e.g., payment, redeem a coupon, find the location, collect points, or look at available menu items). Clearly, McDonald’s is capitalizing on what matters to their core customer by providing options for faster, more convenient service and delivery deals, the report states.
“With mobile order and pay now active in over 20,000 restaurants, we’ve turned our focus to building customer awareness, encouraging more app downloads, and driving active usage,” McDonald’s Easterbrook told analysts back in April. “Digital menu boards, self-order kiosks, and mobile apps that build awareness of the breadth of our menu and quality of our food. Enhanced drive-thru is helping us quickly serve more of our time-pressed customers whilst creating a culture of hospitality with table service that unlocks the potential of the investments in technology for capacity optimization by creating a low-stress, personalized experience.”
Resetting, Not Forgetting
In January 2018, McDonald’s rolled out the $1, $2, $3 dollar menu. Instead of employing what Sense360 calls a “set it and forget it” approach, McDonald’s continued to acutely monitor and refine the promotion.
That was important, as in the campaign’s first two months, performance proved sluggish. But then, a turnaround appeared as sales and foot traffic improved in March.
The secret marketing sauce was found in March’s introduction of a breakfast-based value play. According to Sense360, it worked, as McDonald’s saw a 4.2 percent lift in the morning daypart during the promotion.
“The breakfast value proposition McDonald’s introduced in March definitely helped,” Portnoy said. “The big questions are if it went far enough and if the effect will last. What impressed me most was less the impact of the promotion, and more the quick reaction from McDonald’s. They noticed breakfast was a drag in early 2018 and they responded quickly.”
There is a lesson for rival QSRs in what McDonald’s did. But according to Portnoy, copying McDonald’s playbook will be extremely difficult to replicate.
“McDonald’s is a formidable competitor that does a lot of things very well,” Portnoy. “They also have a massive base, economies of scale, and a very sophisticated team. But most importantly, they know what they stand for and what they are good at, and they do those things very, very well.
“I think people in the industry sometimes forget that the category as a whole is broader than just McDonald’s and that the reason people choose the category represents a broader set of reasons than just those that McDonald’s is good at,” Pornoy added. “Rather than follow McDonald’s into value and convenience and fight them at their own game, other chains should consider hanging their hat on some of the other drivers that matter with QSR consumers like the taste of food or freshness. I think this will ultimately be more successful than constantly replicating the very things McDonald’s is best at.”