McDonald’s breakfast gamble paying off…customer continues to dominate relationship.

Last Fall, McDonald’s announced it would be offering their breakfast menu all day. It was widely seen as a bold move, but one that had a certain level of risk. Especially when it came to how their supply chain would be able to support the change. We took a cautiously optimistic view of the move – click here for our post. The gamble 657553-03d0daec-1fa9-11e5-9bcb-f95a534f046cseems to be paying off for McDonald’s as well as to the detriment of their competitors. Players such as Jack in the Box basically admitted that their competitor’s offering all day breakfast has been detrimental to their business:

“Jack in the Box sales in the last part of the quarter were lower than we anticipated as several competitors began promoting aggressive value offers,” Jack in the Box CEO Lenny Comma said. “We also experienced weakness at breakfast and lunch throughout the quarter, which we attribute primarily to our decision to shift the timing of some of our promotional activity around breakfast to the second quarter as compared to the first quarter of last year. In addition, we believe a competitor’s messaging around its launch of all-day breakfast had some impact on our results, particularly in the 10:30 a.m. to noon period.”

Click here for the full post on McDonald’s breakfast results.

The undertone of this shift with McDonald’s and the positive results they are enjoying, goes back to the rise of the customer. The customer spoke, those that listened are reaping the benefits. The restaurant and food industries are retail sub-segments that are particularly sensitive to customers’ tastes…literally. As we have witnessed customers’ power growing in the relationships with retailers, this is never more apparent than in the food sub-segment.  Restaurants and grocers have to be acutely in tune with the changing winds of demand from their customer base. Especially as food has become a fashion extension – foodies of all shapes and forms are abound.

As McDonald’s offered all day breakfast, not based on a whim but due to what they perceived as an unmet demand from their customer base. The lesson to take from these results is not only that McDonald’s has found success with their venture, but they also had the proper basis to make this decision. Weighing perceived customer demand, pent up market need and impacts on margins have to be taken into consideration when launching into a new product and direction.

Congratulations to McDonald’s on finding success with their all day breakfast. But as we all know, success can be fleeting. The Golden Arches cannot rest on their laurels. Not only will their competitors refocus on how they can retake some market share but the customers’ demand will evolve in manners we have not yet thought of. It is up to these entities to try and stay ahead of this wave. Not an easy task.

For an in-depth look at the food supply chain, click here for our latest research.

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