McDonald’s Has an Identity Crisis

Poor McDonald's (NYSE: MCD  ) .

Once heralded as the cradle of fast-food innovation, the golden arches seems to be suffering from a full-flown identity crisis.

We've been hearing about McDonalds' attempts at serving up high-end coffee, wings, and salads. And now the latest announcement: McDonald's will be expanding test marketing of its build-your-own burger concept. Yes, soon you may be able to "have it your way" ... at McDonald's.

All of these initiatives leave me wondering, what happened to being an innovator? McDonald's has created a clear impression that it is more interested in being like the other "cool kids" on the block than being best at what it does well.

Building a better burger

Last fall, McDonald's set up a build-your-own burger test program in Laguna Niguel, Calif. With the aid of a tablet, customers have been able to pick the bun, patty, cheese, and toppings that would then be assembled into their personalized burgers. The newer burgers are priced higher than typical McDonald's fare, at $8 to $9 apiece. Encouraged by this experience, the company is expanding the test into up to 100 other California restaurants.

While customizing sandwiches has long been the trademark of Burger King (NYSE: BKW  ) , industry analysts see this move as more of an attempt to emulate the success of fast-food powerhouses such as Chipotle (NYSE: CMG  ) and Subway whose businesses are built entirely around an interactive customer experience. But this comparison begs a question: What drives customers to return to Chipotle and the like? Is it the joy of personalizing a meal, or is it something else?

With a food economy increasingly driven by consumer interest in healthier eating and "greener" sourcing of ingredients, it may be that McDonald's is missing the crux of Subway's success. A burger, after all, is still a burger, no matter how you build it.

For McDonald's, elevating its core offerings to be regarded as more than typical-tasting, artery-clogging diet-busters may be more of its opportunity. Ultimately, build-your-own seems like a distraction unless the quality of the food is somehow improved.

Source: McDonald's

Fitting a new model into an old system

The hallmark of what makes McDonald's work is its assembly line approach to serving up meals quickly and efficiently. Customers know exactly what they will get and how long it will take. While food from McDonald's has its drawbacks, the experience is predictable, and this may, in fact, be one of the company's greatest assets.

If McDonald's plans to offer build-your-own in existing locations, it is difficult to imagine how this would flow in terms of set up and timing. Ultimately, integrating this type of offering sounds clunky and disruptive to the way McDonald's currently operates.

McDonald's, why not be yourself?

While McDonald's continues to try on the perceived success of other fast-food outlets, it may well be missing its greatest opportunity. Why not take what it does best and simply make it better?

Customers pull into a McDonald's drive-thru seeking speed, value, convenience ,and familiarity. The build-your-own initiative seems to undermine all of those pillars of success. Restoring market share can't come from emulating competitors and doing it less well. For a company that has built a global enterprise around serving burgers and fries, the answer may well be to concentrate resources on building the better burger in an authentic McDonald's style.

The next step for you
Want to profit on business analysis like this? The key for your future is to turn business insights into portfolio gold through smart and steady investing ... starting right now. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. The Motley Fool is offering a new special report, an essential guide to investing, which includes access to top stocks to buy now. Click here to get your copy today -- it's absolutely free.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2862820, ~/Articles/ArticleHandler.aspx, 11/26/2014 3:28:55 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement