Data Dive Gives a Glimpse at the McDonald’s Playbook
McDonald’s is closing in on second-quarter earnings later this month, and analysts think it will be another good quarter for the QSR giant. In the first quarter, McDonald’s reported 2.9 percent same-store sales growth, well ahead of the industry average of negative 1 percent. Analysts believe the company is poised to stay ahead of the industry at large in the next quarter too.
Ahead of the numbers, the data insight firm Sense360 released a glimpse into how McDonald’s is maintaining its lead.
“The thing that I found most interesting at looking deep into the McDonald’s data is just how aligned everything they do is. They’ve got a strategy, they understand their customer, they’re building a product for that customer and it all reinforces itself. It’s something that we don’t see in the rest of the industry, we see a lot of copycatting especially in this last year,” said Eli Portnoy, founder and CEO of Sense360.
Where McDonald’s leads, Portnoy said, it seemed like other QSR players followed, but neglected the strategy and didn’t see the same results.
“Value is just an extension of their strategy,” said Portnoy. “I think that’s why it works for them and didn’t work for so many others.”
At the heart of that strategy is finding tactics that work with the core McDonald’s customer. According to the Sense360 report, just 22 percent of the U.S. population accounts for 35 percent of McDonald’s visits. To make sense of the location data and surveying done by the firm, it’s created a handful of QSR consumer personas. It found that there were two dominant customers at McDonald’s: Busy Budgeters and Hardworking Homebodies. The former consists of busy families that eat out often, fitting something in during busy days, and the latter stops on the way home for a convenient drive-thru dinner for the family.
McDonald’s customers surveyed as part of the study want convenience and value more than the industry at large. Some 49 percent said they care about convenience compared to 38 percent among the industry at large. And 33 percent said they care about value, compared to 22 percent in the broader industry. And just 12 percent said they cared about the food taste and quality, compared with 29 percent in the industry at large. So all those fast-casual “better burgers” just aren’t what woos these consumers.
That’s a key reason McDonald’s is outperforming the industry at large, said Portnoy. It identified those key consumer attributes and built the strategy around attracting them again and again.
“People choose the QSR category for a lot of reasons: convenience, price is another, the food is another, but there are lots of them. And McDonald’s has sort of zeroed in on the idea of convenience and value,” said Portnoy. “But there are all these other wide open green fields that other restaurant brands can latch onto to create a product for and build a message around, but they don’t—they still try to play in McDonald’s turf.”
He said based on marketing timing and location data flowing through smartphones—how Sense360 gets its behavioral data—those tactics and strategy were on full display around the launch of a breakfast promotion early this year. When the 1 2 3 Dollar Menu launched in January 2018, it was doing fine overall, but there was significant softness during the breakfast day part. But by March, they had changed to a very popular 2 For $4 promotion for breakfast sandwiches and the breakfast day part grew again.
“What I found just fascinating is how quickly they reacted. To me, the fact that this year stared off sluggish and was primarily being dragged down by breakfast. But by March they already had new breakfast promotion, to me that’s a amazing,” said Portnoy. “Few other large restaurant brands are able to operate at that speed. That’s part of their operational excellence—they’re constantly monitoring what’s working and what’s not and taking action.”
To achieve the same kind of results takes a thoughtful look at the data flowing through every restaurant brand, identifying those core customers and building a strategy around it all. And QSRs should especially remember not to just chase the big McDonald’s.
“It’s highly likely that your segments visiting you are different than McDonald’s. I can tell you the overlap between McDonald’s and Starbucks is very, very small and they care about vastly different things,” said Portnoy. “Really you should look internally and see what I can do well that is different, what will give me an opportunity rather than going head-to-head with someone who has more resources than me.”