Reading this piece about the challenges facing McDonalds, and the likelyhood of Starbucks overtaking them as the world's most valuable restaurants chain, made me think about a couple of things.
First is that McDonalds have been up against some major global trends in recent years. The most important one is that consumer tastes are changing and an ever increasing slice of the market care much more about their health and where their food has come from than they used to. The cheap, convenient and consistent McDonalds offering seems increasingly outdated.
McDonalds must have seen this coming years ago and its impact is now clear to see. But in the classic innovators dilemna there is a big difference between seeing something coming and actually being able to doing anything about it. McDonalds has moved far too slowly and I believe there will be a whole new generation of fast food restaurants taking over their market dominance over the coming years. Starbucks is just the first.
Second is that culture is such an important foundation for a company. But culture is both really important but also very difficult to change.
I would imagine that the McDonalds culture was all about control and efficiency. Steve Easterbrook, the new CEO, talks about the need to change their culture to encourage more risk-taking. This seems like a very sensible thing to do but whether he can do it and whether it will be in time to save them is doubtful.
My conclusions are that McDonalds is almost certainly doomed as a market leading brand over the next decade or two. And also that a risk taking and agile culture needs to be established from the very beginning and long before its benefits will probably be felt.
When Steve Easterbrook took the helm at McDonald’s in 2015, the world’s largest fast-food company was grappling with an identity crisis. As it entered its sixth decade, sales were falling in its critical home market, consumers were opting for healthier alternatives to its Big Macs and fries, and smaller rivals with fresher menus were eating into its market. Having been a symbol of American capitalism across the globe, McDonald’s had started to represent much that can go wrong at a mature company: it was slow to react to changing consumer tastes and reluctant to take risks, raising questions about its relevancy.