Will Egg McMuffin Save McDonald’s?
Even McDonald’s employees feel for our frustration – having to tell the customers that they didn’t make it to the breakfast time made the list of #WorstSummerJob on “The Tonight Show Starring Jimmy Fallon”.
Fans of McDonald’s breakfast have been begging for 24/7 breakfast for years, but McDonald’s has not taken any action because the expansion could be costly, requiring upgrades such as redesigning the kitchen layout and purchasing new kitchen equipment.
However, it is time to make a change.
McDonald’s recently posted its biggest monthly same-store sales decline in more than 14 years in the U.S., with business dropping off globally as well. Sales have declined in 2014 and continuously plummets in the first half of 2015.
McDonald’s Brand Equity has been suffering as well, according to BAV data. Energized Differentiation, which leads to profit margin, has declined since 2011. Esteem, which is brand admiration, also showed signs of erosion since 2012.
When Energized Differentiation is lower than Relevance, the brand becomes commoditized and customer interactions with the brand become transitional, rather than emotional. This means that customers choose the brand because of low prices or out of convenience. When both Energized Differentiation and Esteem decline, brand loyalty and advocacy diminish.
Continuing the downward trend, brand usage and preference of McDonald’s have declined. Since 2006, usage has dropped by 11% and brand preference is down by 28%.
Furthermore, consumers felt that McDonald’s has not evolved enough. McDonald’s has lost in “forward-thinking” perceptions such as Innovative, Intelligent, Progressive and Visionary; it has also become less Popular and less Healthy.
As the result of continuously declining sales, McDonald’s developed strategies to rebuild its fast food realm. Rolling out all-day breakfast menu is just part of the puzzle, but it should be a positive move for the brand.
Based on BAV data, McDonald’s is a much stronger brand with higher Energized Differentiation and Esteem among those who go to fast food for breafast at least once a month.
Among this target audience, McDonald’s is ranked as the 3rd strongest amongst QSR/CDR brands that serves breakfast on Brand Strength, which is a leading indicator of a brand’s future.
This target audience also has more positive brand associations of McDonald’s than the general population does. They see the brand as more Unique, Innovative, Visionary and Progressive, perceptions that McDonald’s has lost over time.
McDonald’s has already rolled-out #AllDayBreakfast campaigns on Twitter, and we are expecting to see positive movement in brand perceptions.
The fast food industry has been changing in response to consumers becoming more conscious of how food impacts their health. They want companies to be transparent with the sources of the ingredients; they want customized menu/food options, and they want convenience – like ordering pizza with an emoji. The lesson for McDonald’s is that the brand needs to embrace the market dynamic and address consumer needs a lot more quickly in today’s rapidly evolving fast food world, which sometimes requires putting its customers before the bottom line.