Recall These Thoughts

Everyone is Eating McDonald's Lunch

Last December I made a post about Moo Cluck Moo in which I argued against economist Michael Strain:

McDonalds is after the Dollar Menu crowd which, Strain says, isn’t going to swing for the comparatively expensive Fast Casual burger. Presumably it is only a concerned elite that will spring for the pricy Moo Cluck Moo burger. But this logic doesn’t seem to follow the current fast food reality. While NPR compares the price of Moo Cluck Moo’s burger to McDonalds largest offering, the Big Mac, the difference is still only $1.20.

Sure enough, since then McDonald’s profits continue to decline, foot traffic is still falling, and Don Thomson, their CEO of less than three years, has just stepped down. Food Manufacturing suggests the majority of this decline is due to McDonald’s inability to stay on top of demand for ingredients perceived as being simpler and higher quality, a market dominated by, you guessed it, fast casual restaurants such as Chipotle (in addition to traditional competitors such as Burger King who have demonstrated greater agility in meeting market shifts). 

The fact is the competition really is eating McDonald’s lunch. McDonalds simply cannot change course swiftly enough, nor can it shake the negative perception associated with the lengthy list of recent and historical scandals. Most of the new competition are new, agile companies that don’t carry the same baggage McDonald’s does. I’m not complaining for a second. If the future is fast casual restaurants that pay employees $15/hr and offer store-made aioli for only a marginally higher price, then I say this change can’t come fast enough.