Case Study: The McDonalds Secret Sauce

McDonalds Hamburger

What The World’s Best Known Franchise Can Teach You About Business.

It doesn’t matter whether you’re a fan of the fast-food giant McDonalds or not really, the point is that there is no denying that the business has enjoyed the sort of phenomenal global success that many executives and investors dream of, but few achieve.

How does a business grow so successful and maintain success, especially under pressure as changing attitudes mean consumers focus towards healthy food options? The answer is by putting in place bedrock foundations that support the business as it navigates its changing market. Will McDonalds be as big in ten years time? Who knows, but even if it isn’t, these foundations are necessary for all businesses looking to take that next step up.

Not every one will build a global empire, nor does everyone want to. However, if building a successful business – and maintaining that success over time – is part of your dream, read on. McDonald’s foundations don’t just apply to McDonalds; maybe there is room for some of these principles in your business, too.

#1 Foundation Principle: Be Consistent.

It doesn’t matter where in the world you visit, you will have a similar McDonald brand experience wherever you are. Why does this matter? Because consistency reinforces the brand promise and removes purchase risk. The customer knows exactly what to expect when they step through the doors.

The idea of consistency doesn’t just apply to a global enterprise; it equally applies to the local plumber who is trying to establish his or her name as the first person to call in their community. By offering a consistent experience, people know what to expect from you and from this your brand is built and people learn to trust what your name stands for and know that it is safe to buy from you.

Of course, all of this segues neatly into Foundation Principle #2.

#2 Foundation Principle: Build a Brand That’s Known.

There is no doubt that the golden arches are amongst the world’s best known corporate symbols across the world. Why does this matter to you? A brand is only as good as its profile. Just because you have a logo, this is not a brand. A “brand” is the place that you occupy in your consumer’s mind, what your business or product means to them.

Building a brand happens through engineering – deliberate, repeatable action – and not by accident. In the case of McDonalds, the brand is built through the consistency principles noted above, the uniformity of franchise fit outs and strict guidelines relating to how the logo is repeatedly reinforced to support the McDonalds branding. Its film tie-ups (especially with toys) and various sponsorships, plus its global expansion, means the brand has maintained a very high profile internationally.

The McDonalds brand possesses an inherent resilience, which it’s needed when times have been turbulent. Take the cinema screening of “Supersize Me” some years ago (it’s now available for viewing on Netflix).

The company could have been finished (in fact it went through several years of struggle afterwards) but was in part saved by resilience built into its brand through community sponsorship, charity (particularly with children’s hospitals) and Ronald McDonald, the clown. Maintaining goodwill through investment in local communities has provided some brand shelter in the instance of rough weather.

(McDonalds also appointed a new CEO during its darkest days, Jim Skinner, who made a point of eating McDonalds every day so he could interact with customers first-hand. Skinner removed menu items that weren’t adding value and introduced new healthier options.)

#3. Foundation Principle: Be Easy To Deal With.

McDonalds is open 24 hours a day (in most markets), offers different meal sizes to cater for different preferences, and offers low prices. It offers free wi-fi to attract the mobile market. It is usually found in busy places, you can drive straight in and order from your car if you don’t want to head inside.

Regardless of your own perception of the quality of the food, the business makes it easy to do business with it.

#4. Foundation Principle: Ensure Your Product’s Relevancy.

“You can have any color, so long as it’s black”, is a quote attributed to Henry Ford (although there are plenty of people who argue he never said such a thing.) The point is, sure it might be easier just to churn out black widgets to everyone, (think – one manufacturing line, bulk buy on paint, etc.), but this has a real downside in terms of product relevancy when you try to apply one size across different markets.

Even in the case of multi-national McDonalds, local outlets are able to adapt menus to suit the local palate and market preferences.

In Egypt, McDonalds sell the McFalafel sandwich, while Israel has an entirely kosher menu. Many countries (Malaysia, Saudi Arabia, Pakistan and more) are certified halal, while in some German franchises, you can buy McDonalds, served with beer.

Product customization to cater for local tastes, laws, traditions or even religious beliefs, doesn’t stop McDonalds being McDonalds because it doesn’t negatively impact the brand experience.

In fact, why stop at one product? Why not bundle products together into one cheaper package of multiple products – Happy Meal anyone?

Bundling can be a very successful strategy. Instead of a consumer buying one product, they buy three or four. When it comes to telecommunications, a household with data, mobiles and home phone all bundled together increases brand-stickiness to the carrier three-fold.

The moral of the story is that to ensure your relevancy, adapt your product where necessary and innovate to keep it future-proofed as far as possible.

#5. Foundation Principle: Focus on process efficiency.

The idea that processes need to be finely tuned and continuously improved to derive the greatest efficiency is not new. Back in the late 1940s, American Edward Deming was working with Japanese manufacturing to establish Kaizen, a business methodology that pioneered the more recent quality management systems. It led to the Japanese becoming a post-war powerhouse manufacturer (before the rise of other competing Asian nations).

With improved productivity, you need fewer staff and (hopefully) you’ll improve both the quality of your goods and increase your speed to market.

But the real kicker with inefficient processes is that the inefficiencies add costs that are often invisible to a business. If an email takes 5 minutes to write – but could take 30 seconds if there was an off-the-shelf option available – there is a clear benefit of over 4 minutes of someone’s time. Multiply that by 100 or 200 emails a day and the inefficiencies start to hurt.

So look for automation, removal of duplication, shortening and streamlining processes so that time and effort can be applied more productively.

Key Takeouts:

Be consistent; build a brand that’s known; be easy to deal with; ensure your product’s relevancy and focus on stripping out inefficiency.

Do these things and your business might be the next global powerhouse brand that everyone learns from.
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Marketing Strategy: McDonalds, The Golden Arches of Hamburgers
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Marketing Strategy: McDonalds, The Golden Arches of Hamburgers
There is a lot to McDonald's secret sauce. We dissect 5 things that the world’s best known franchise can teach you about business.
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Undercover Strategist
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