McDonald’s cannot beat Shake Shack and Wendy’s on “Signature-Crafted Burgers.” It doesn’t have the right business model to prepare and deliver them to its customers.
That could explain why the company removed them from its menus, sticking with its conventional Quarter Pounders.
The fast food giant introduced the Signature Crafted burgers two years ago in an effort to catch up with competition from Wendy’s and Shake Shack, which focus on premium burgers made with fresh ingredients.
“Indulge in the Signature Crafted Recipes collection by McDonald’s and discover the sweet and savory flavors from our menu of mouthwatering burgers,” said McDonald’s site. “Enjoy our delicious recipes on single or double 100% fresh beef patties that are sizzled and seasoned on our flat iron grill right when you order.”
The problem was that making signature burgers takes more than fresh ingredients. It requires preparation, which competes for the limited kitchen space with conventional burgers and all-day breakfast items.
In fact, that’s the official reason given for dropping the product from the company’s menu.“It (the removal) probably has more to do about the process of cooking the burger in McDonald’s than it does what the consumer is saying about the food,” Howard Penney, a managing director at Hedgeye Risk Management, was quoted saying in Reuters.
Moreover, signature burgers require a certain degree of customization that slows things down, undermining one of the core elements of McDonald’s business model: speed.
Over the years, McDonalds has managed to survive and thrive by adopting and adapting new product menus and new services to address the demands of a diverse consumer market—as shaped by demographic, economic and local trends around the world.
McDonald’s rode the baby-boomer trend in the 1960s, the growing ranks of teenagers and the rising female labor force participation, with a fast and inexpensive menu. And the globalization trend in the 1970s and the 1980s, transferring the American fad for fast food overseas.
Meanwhile, it adapted to the social context of each county by franchising to local entrepreneurs.
The trouble was that these efforts to address a larger market went too far, and steered MacDonald’s off its core business model.
That’s a situation the company sought to change in the 1990s and early 2000s by launching the “Fast and Convenient” campaign that involved a radical adjustment of the company’s product portfolio to emerging food industry trends — refurbishing McDonald’s restaurants to achieve a banded, updated, and more natural dining environment.
The “fast” and “convenient” elements of the McDonald’s concept were supplemented by the “healthy” and “more natural” element, adding salads, fruits, and carrot sticks to the menu.
In recent years, McDonald’s has continued to broaden its product portfolio by offering high quality coffee and healthy drinks (either through its traditional restaurants or the Cafés), competing head to head with Starbucks (and local cafeterias) —benefiting from local trends like economic stagnation in Europe, and robust growth in China.
And by offering signature burgers to keep up with Shake Shack, Wendy’s and Five Guys.
But, apparently these efforts went too far once again, steering the company away from its core business model. That’s why the company had to drop these products from its menu.
McDonald’s cannot be all things to all people. It has to stick with what can be scaled within its business model; and let the competition deal with the rest, like gourmet burgers.