Why McDonald’s Is Losing The Burger War And What Their Product Managers Can Do About It

by drjim on January 29, 2018

The Big Mac just is not relevant any more

The Big Mac just is not relevant any more
Image Credit:
pointnshoot

The product managers over at McDonalds have a problem on their hands. Yes, they work for one of the most successful companies in the world. For over 60 years McDonalds has been synonymous with fast food. However, the world is changing and McDonalds is not changing with it. A recent study showed that only one in five millennials, a core market for McDonald’s, had ever tried a Big Mac burger. What’s happening is the company’s flagship product is no longer relevant. What’s a product manager to do?

The Problem With McDonald’s Burgers

So what went wrong with the McDonalds burger strategy and product development definition that had worked so well for so long? The first thing that happened was that sales stopped growing. Just a few years ago, the growth rate was an anemic 1% – 2% annually. Since then it’s slowed to nothing – the past few years have been flat. At the same time a new competitor has shown up: the so-called “better burger” chains. These restaurants offer their customers gourmet burgers that are made ready-to-order. The burgers are offered in a quick, casual service environment. All of this goes against McDonald’s core philosophy of providing standardized food as quickly as possible.

One of the problems that the McDonalds product managers are facing is that what they’ve been doing has worked in the past. At McDonald’s right now, the company gets 70% of its revenue from its drive through operations. The way that the company is able to serve so many people so quickly is because their burgers are made in advance, held in warming cabinets, and then they are ready when customers order them. The company’s goal is to be able to deliver a burger to a customer a mere 90 seconds after they have ordered it. This has served McDonalds well for a long time, but now it seems to be holding the company back.

The McDonald’s product managers have tried to keep up with the times. They have added more items to the menu. However, burgers still account for roughly 20% of the chains total sales. They have tried on a number of different occasions to introduce new burgers that were made with higher quality ingredients and which sold for a higher price. However, in each case, their customers have soundly rejected the new products. That’s not going to look good on anyone’s product manager resume.

What The McDonalds Product Managers Can Do

One of the big problems that the McDonald’s product managers are currently dealing with is that there is an overall feeling that the quality of the current burgers has slipped. Consumer Reports did a ranking of 21 different hamburger chains in 2016 and McDonald’s came in dead last. The reason for this is that the company has been making a number of changes to how they prepare their burgers in order to speed up the process. The result has been a lower quality product. What the McDonald’s product managers are now realizing is that the world is not waiting for another burger from McDonald’s, rather they are waiting for a better burger from McDonald’s.

What the McDonald’s product managers need are new ideas to attract more customers. They are using a panel to help the company refocus its efforts on the taste of its products. The company is investigating using a customized ordering system that allows customers to create a custom burger. The company is also investigating different cooking techniques. These include switching from the Teflon sheets that are used now and which are easy to clean up to using an iron grill that would produce a hotter burger. Combining this with buns that are being toasted for an additional 5 seconds results in a burger that is 15 degrees warmer when served to customers.

One big new idea that the product managers are currently considering is changing the beef that is used in the McDonald’s burgers. Currently the company and its processes are set up to use frozen beef. The product managers are considering switching to using fresh beef – this could improve the taste of the burgers. However, this kind of change has a lot of ramifications that come with it. Delivery, storage, and how to keep the meat so that it’s safe to use are key issues that would have to be solved by the product management team.

What All Of This Means For You

You would think that being a product manager at McDonald’s would be a great job. The company is very well known, it has been in business for over 60 years, and we’ve all eaten there before. However, times are changing and McDonald’s is being left behind. Their product managers need to use their product manager job description to discover what is going on and then they need to take action to reverse this trend.

Growth at McDonald’s over the past few years has been slow to non-existent. At the same time, a new class of competition in the form of “better burger” chains has shown up and has stolen McDonald’s core market of millennial customers. What McDonald’s is doing today is what has worked for them in the past. They have tried to change with the times by expanding their menu and adding higher quality burgers for a higher price. However, every time they’ve done this, it has been a failure. One of the reason that people are not selecting McDonald’s burgers is because the quality has fallen over the past few years. The company is trying to be innovative with new ordering systems and cooking techniques. Additionally, they are considering switching from using frozen beef to using fresh beef.

The good news for McDonald’s product managers is that the company is still successful. The bad news is that the company is not as successful as management wants it to be and the completion is even more successful than they are. The McDonald’s product managers are on the right track – it’s all about the taste. Now they just need to find a way to make their burgers taste better and still be able to deliver them fast and hot!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think adding more items to the McDonald’s menu was a good idea or a mistake?

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What We’ll Be Talking About Next Time

By now we all know Amazon as the gigantic online store that sells just about everything. However, what a lot of us may not realize is that, depending on where you live, Amazon has expanded their product development definition to sell food. Lots of food. The product managers over at Amazon are under pressure to make more money all the time and it turns out that selling food does not leave a lot of room for finding ways to make more money – milk costs what milk costs. However, they think that they may have found a way to be even more successful: private label brands.

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