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What’s the lesson from the Big Mac?

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A few years ago it became apparent that all was not well in the land of fast-food giant McDonald's. In the US, the company's share price fell reflecting the trend that consumers were changing their tastes and demands for fast food. Robust competition and the anti-obesity movement raised questions about the business model traditionally held up for all others to copy.

Responding to falling sales, 98 per cent of McDonald's franchisees voted to offer the public $US1 meals. Rival Burger King said it would offer 11 meals at US99c.

Despite the homogeneous tendencies of a globalised Western world, “McFailure” didn't happen at exactly the same time, or as profoundly, in Australia.

But across its US operations, the company faced a series of problems.

At the time, a Salomon Smith Barney analysis of the franchise group targeted the organisation for a downgrade, and argued that little was being done to fix what customers were complaining about.

Americans believed that, along with burgers and fries, they were getting rude service, slow service, inaccurate service and unprofessional employees.

An article in The Guardian on McDonald's problems referred to some “Back to the Future” solutions the company had been using to try to put the sizzle back in its business.

In Evansville, Indiana, it brought back the concept of the old-style diner that McDonald's was created to replace. These outlets offered two types of service – traditional fast-food and full diner-style service with waiters.

But this tampering with the McDonald's formula didn’t remain the exclusive domain of the Americans – and Australia started to respond.

Two outlets started to serve the kind of food you might have had on a Sunday night in old fashioned Australia, like roast chicken.

One of the local company's biggest innovations was the new taste menu. It competed with the old burger and fries menu, offering the likes of ham, cheese and tomato toasted sandwiches, which was a reaction to changing lifestyles and eating habits. The focus of consumers was moving to healthy, fresh food.

The local McDonald's business hadn't done much customer research in the past, but it introduced an internal chef who brought customers in to see what they want.

Chicken McNuggets may have been created by the secretary to McDonald's founder Ray Kroc, but the McOz meal was created by franchisees in Newcastle.

So where’s the lesson there for a small business? Today’s great seller could be tomorrow’s loser. It’s important to keep an eye out for changes in consumer tastes and preferences and always adjust your products or services to keep pace with these changes. For longevity in business, being open to change is imperative.

Looking to grow your business? Book a free business assessment with Switzer Business Coaching today. 

Published on: Tuesday, September 01, 2009

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