Tag Archives: McDonald’s

Stylish AND Cheap Sells; Good Advertising Helps

Just because we advocate appealing to people’s heightened dollar-value consciousness doesn’t mean we necessarily advocate abdicating style, fun and intellectual and emotional appeal.

What do these things have in common?

a. Burger King Whopper Jr.
b. Taco Bell bean burrito
c. McDonald’s Big N’ Tasty
d. Wendy’s Small Frosty

We’ll give you a hint: They’re all available for about a buck on the value menus of their respective QSRs (quick service restaurants).

In a recent post, we talked about how fast and cheap seem to be winning out, at least if three-year stock performance is any indication.

But as we’ve also discussed, being fast and cheap, even under the threat of rising prices and reduced productivity, isn’t enough. Consumers want it all, remember? And they’re always right. You have to be cool, stylish and lifestyle-relevant while satisfying the more mundane elements of the value equation.

So, once again, we sing the praises of the Golden Arches. “What makes them so great?” You ask. Check this out.

Hot (at least half the time) food, wrapped in paper and set on a tray is nothing special. That’s where advertising comes in.

Food, any kind of food, fast food included, has numerous close substitutes. And regardless of what we tell ourselves, there’s only so much we can do to the product itself. We can improve service, make the experience more exotic and, importantly, we can create an expecation or reinforce a decision with the use of properly placed, relevant and compelling advertising.

In a world with hundreds of different fast food options, McDonald’s makes people feel good about having just visited one of the chain’s thousands of locations by reinforcing their choice with messages like the Chicken Dance commercial.

It may not get you to run right out and by an Extra Value Meal. But it will reduce the cognitive dissonance that many people feel before, during and after eating at the restaurant. “I really want the burger and fries, but I know that later I’ll feel like I could have made a healthier choice. Still, it’s always so satisfying.”

It doesn’t hurt that this particular ad is tagged with a shot of a seemingly healthy wrap, Dasani bottled water and a fruit/yogurt parfait. And it doesn’t take a genius to figure out that many of us won’t be ordering that particular combination of menu items.

But that doesn’t matter. McDonald’s has given us the options, shown us how much fun their brand adds to our lives and simply asked us to make them a part of our lives. It’s not a push-y strategy at all. They’ve even toned it down on the promotional offers, specials and movie tie-ins. It’s not all about product and price.

If McDonald’s and Wal-Mart can do it, smaller competitors who trail them better take notice.

Profiting from inflation: What does Wall Street tell us?

Wondering how gas prices are affecting dining habits in the US? Let’s take a look at stock performance in the quick service restaurant (QSR) sector, compared with family casual/grill and bar.

McDonald’s stock has nearly doubled in price since this same week in 2005, going from $30.99 a share to $60.16 as of Wednesday’s close.

Interestingly, unleaded gasoline prices have done the same, going from $2.32 a gallon this week in 2005 to a record US average price of $4.11 yesterday, according to AAA. Pretty strong correlation. Not causation, but consider some additional evidence.

Over that same period, Brinker International (owner of Chili’s) stock has fallen from $27 to $18. DineEquity, the parent company of IHOP that acquired Applebee’s last year has fallen even more precipitously.

The Street tends to price value appropriately. There are exceptions, but these performances seem to line up with fundamentals.

That is, fast and cheap is better when most-not all, but most-people are on tight budgets and tight schedules that are tightening daily due to inflation and our culture of busy-ness.

The plight of Chili’s, et al, is a reminder that food marketers must react quickly to unanticipated changes.

We can all learn from watching these two markedly different parts of the foodservice sector. It’s a good lesson in finding opportunity within challenges. We can’t just throw up our hands and say, “Well, it’s just tough. Our business model isn’t built for this kind of market.” We have to find ways to compete.

We can do it. Let’s talk about it.

Smoothie Sailing

It will be interesting to see how the latest round of drink menu augmentation goes for Starbucks and their competitors.

The coffee purveyor and “third place” proprietor is serving up a new batch of “healthy-sounding” smoothies, designed to compete with similar offerings from Dunkin’ Donuts and others.

Now, the Spoon loves a Venti Caramel Macchiato as much as the next guy, but we’re not sure this move by Starbucks satisfies at least one of Ries’ and Trout’s 22 Laws, which is that it’s better to be first than better.

In other words, they’re not exactly creating a new category here. ‘Cause even if these smoothies are better, there doesn’t seem to be anything radically different about them.

The new VivannoTM from Starbucks.

Then again, people are always looking for convenient meal ideas, especially in tight financial times.

See for yourself. What do you think?