On the Margin
Food matters, and McDonald’s just proved it

Food matters, and McDonald’s just proved it

This post is part of the On the Margin blog.

McDonald’s Corp. turned a corner with its sales results in the third quarter, thanks to butter.

The company recently changed its popular Egg McMuffin sandwiches. It went back to the old English muffins and it replaced the liquid margarine it had used with butter.

Sales of the muffins soared, by double digits. That was enough to help carry McDonald’s to 0.9-percent same-store sales growth in the period, the first quarterly growth in two years.

Analysis of McDonald’s sales problems dating back three years has covered a wide variety of issues. Heightened competition from Burger King and its $1.49 chicken nuggets. The lack of value. An overly complex menu. Or perhaps people are just tired of eating at the same places and want to go somewhere else.

But the fundamental issue in the restaurant business is food quality, and that has never been truer.

“They can do all of this other stuff, but until they fix the food in some way, then everything is a short-term band-aid effort,” said John Gordon, a restaurant consultant out of San Diego.

McDonald's Egg White Delight McMuffin. (Photo courtesy of McDonald's)

McDonald’s traditionally operates restaurants that sell food cheaply and quickly. It has never had a great reputation among consumers — McDonald’s has routinely scored low marks in consumer surveys.

But that never mattered. Despite those low marks, the chain has grown to unbelievable heights. It has $2.5 million unit volumes in 14,000 locations. Even after the recent sales weakness, it still has 48 percent of the market share among the country’s largest limited service burger chains, according to Nation’s Restaurant News Top 100 data. It has more than double the market share of Burger King and Wendy’s combined.

To be sure, consumers still like fast food, and Burger King, Arby’s, Sonic and Jack in the Box have all had strong sales recently.

Yet the intense competitiveness of the current restaurant market means that McDonald’s — and everybody else for that matter — has to do its job better than it did in past years. Fail at meeting consumers’ expectations, or refuse to improve in an era in which your competitors are improving, and you will lose sales.

That’s why McDonald’s spent the year working on order accuracy. It’s also why the chain is determined to get a permanent value component that consumers like inside its restaurants.

Yet food remains paramount. McDonald’s decision to return to its original Egg McMuffin recipe, complete with butter, proved that importance. A simple change in the recipe and consumers went back to it in droves.

That bodes well for other company efforts. CEO Steve Easterbrook noted last week that the company is toasting buns longer and changing the searing process on its burgers so it can serve “hotter, juicier sandwiches.”

Said Gordon: “If you can improve the quality without layering in price, consumers will see it as a value.”

Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze

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