Reference no: EM131198817

When Will McDonald's Innovate?

Dec 15, 2014

Earlier this month McDonald's reported its steepest monthly decline in U.S. sales in more than 14 years! Take a look at this graph from The Wall Street Journal:

Today's restaurant

So McDonald's has a serious problem, as sales are declining continuously in its home market. And it's not only a U.S. issue. Their performance was down all over the world in October:

- U.S. down 1.0%
- Europe down 0.7%
- Asia/Pacific, Middle East and Africa (APMEA) down 4.2%

The cash cows of McDonald's are golden oldies. The hamburger was introduced in 1948. The Big Mac was launched nationwide in the US in 1968. The Quarter Pounder was invented in 1971. Later of course a lot more items were added to the menu and the retail concept was continuously improved. Recently the company tried to optimise its menu and modernise customer experience, but the efforts have not shown positive results on sales.

Today's restaurant business is changing very rapidly. Just have a look at the top 10 restaurant trends in 2015.

1. Meals served with a side of bragging rights.
2. Go small or go home.
3. Traditional sit-down market shrinks.
4. Beverage boom.
5. Asia ascendant.
6. Bitter is better.
7. Customers' (healthy) choice.
8. Locavores take over.
9. Highlighting the human factor.
10. Forget Millennials - it's time for Generation Z.

Is McDonald's addressing these trends? Are their portions becoming smaller? Are they becoming really higher-quality? Are they making beverages a headlining act? Are they going Asian? Are they introducing products with bitter flavours? Are they offering dieting options? Is McDonald's serving local food from around the corner? Do they?

Since 2001 McDonald's operates an Innovation Centre in Romeoville (U.S). It focuses on better service, shortening service times, ensuring that kitchens and crew members are ready to prepare new foods and drinks, and updating the ordering process. Although they are doing a great job, I am afraid that operational excellence won't save McDonald's this time. To grow their revenues McDonald's needs innovation excellence. It's all about 'doing really different things or doing things really differently' for the world's largest chain of fast food restaurants, serving around 68 million customers daily in 119 countries across 35,000 outlets.

Chief Executive Don Thompson said in the WSJ on December 10th that McDonald's is adding the ability to customise orders in some markets, letting customers use tablet computers to choose toppings. This option will be available next year in about 2,000 of its more than 14,000 U.S. restaurants. In my view these are only minor changes.

Big companies like McDonalds will only stick out their necks for real innovation if doing nothing is a bigger risk. Well, McDonald's: it's time for some drastic innovation NOW!

In addition, McDonalds SA had a poor commitment to customer service. Hellopeter had a total of 926 complaints against McDonalds being lodged by dissatisfied customers.

TASK:

With reference to the article above, advise the marketing manager of Mconalds SA on the most appropriate competitive marketing strategy going forward to outplay the current competitors using the key 10 restaurant trends and customer service complaints. Your report should focus on the following:

1. The current situation facing McDonalds

2. The current challenges in the industry

3. McDonalds current positioning in the market; and

4. Marketing and competitive strategy going forward taking into account the key 10 trends and customer services complaints.

Assignment Format:
1. Title page
2. Table of contents
3. Introduction
4. Situation analysis
5. Current Challenges in the industry
6. McDonalds current positioning
7. Marketing and competitive strategy going forward
8. Action plan
9. Conclusion
10. References