‘The Founder’ Offers Nostalgia, Inspiration For A McDonald’s That’s Come A Ways Since ‘Super Size Me’

January 25, 2017

founder_still_michael-keaton-1200x800

http://www.forbes.com/sites/darrentristano/2017/01/20/the-founder-offers-nostalgia-and-inspiration-for-a-mcdonalds-thats-come-a-long-way-since-super-size-me/#58d92d12634f

I am proud to say that the late longtime McDonald’s CEO Ray Kroc and I were both born in Chicagoland in Oak Park and graduated from Oak Park and River Forest High School. But while Kroc spent his life building a global mega-burger brand, I’ve spent mine eating his burgers, French fries and drinking his shakes.

Kroc is legendary in the foodservice business. His passion, energy and determination fueled his competitive spirit and has served as an inspiration for many of today’s successful brands.

Today’s consumer may not understand the importance of fast food and its place in history. Kroc redefined the term convenience through the expansion of the McDonald brothers’ Speedee service system and gave Americans a consistent, affordable and fast option to dine away from home. The chain’s efficient systems in the back-of-house and focused customer service not only served billions but created millions of jobs. Through innovation and drive, this founder invested in a business that has stood the test of time.

This story, as told in the new movie The Founder, is a classic representation of the American dream as realized by an ambitious and aggressive salesman risking everything to invest in a blue sky idea. Choosing hard working franchisees and gaining the insight of a few smart people along the way, he was able to navigate obstacles that stood in the way of his success. The portrayal of Ray Kroc by Michael Keaton gives the audience a taste of his persistent, aggressive and ruthless tactics that allowed a businessman in the 1950s to achieve his goals and build a food service empire.

So how could the portrait of the company in this movie impact visits to McDonald’s restaurants? Will consumers leave the theater with their own renewed sense of personal ambition and strong sense of respect for an American institution or will they continue to see fast food giants in an increasingly negative light?

After spending the last 24 years doing research at food service consultancy Technomic, I believe the movie will meet with a favorable reaction from consumers. Younger generations who grew up with the brand will be able to better relate to the story and begin to emotionally connect to a brand they are familiar with but perhaps outgrew as they aged beyond happy meals, play places and fun characters like Grimace, The Hamburglar and Mayor McCheese. Millennial consumers who grew up eating at McDonald’s and often finding their first employment at there will reconnect with a brand that served them convenient breakfasts, café beverages and affordable dollar menu items. Older Gen X and Boomer generations will reminisce by finding their way back to McDonald’s for a nostalgic signature Big Mac or Quarter Pounder. They will remember the legendary jingle “two all-beef patties, special sauce, lettuce cheese, pickles, onions on a sesame seed bun” as they sink their teeth into a fresh Big Mac which can now be customized into three different sizes for any appetite.

It wasn’t that long ago that Super Size Me hit the big screen and outraged Americans. But since 2003, McDonald’s has dropped super sizing, focused on improving the quality of their ingredients, enhanced their supply chain practices supporting animal welfare and worked hard to maintain convenience, affordability and consistency across their 14,000-plus U.S. restaurants and global locations. Although this movie likely won’t have a significant effect on traffic to the stores, it’s more likely that moviegoers will consider McDonald’s a bit more in the short term and patronize a business that has been a pillar of our post-war culture.

I enjoyed the movie with my son and then we stopped in to our local McDonald’s for a couple of Big Macs and apple pies. McDonald’s has always been a part of my life and I don’t ever think the day will come that I won’t drive through or stop in for a fast food bite of nostalgia and some great family memories from my parents and with my children.

 


McDonald’s Turnaround Fails to Get More Customers in Door

October 26, 2016

1x-1

Leslie Patton
Bloomberg
http://www.bloomberg.com/news/articles/2016-10-26/mcdonald-s-turnaround-fails-to-get-more-customers-in-the-door

McDonald’s Corp. has figured out how to capitalize on the popularity of its breakfast menu, stop a slide in same-store sales and cut corporate overhead. What it hasn’t figured out is how to get more customers into its restaurants.

The world’s biggest fast-food chain is facing its fourth straight year of U.S. traffic declines, according to internal company documents obtained by Bloomberg. The drop follows at least four consecutive years of customer gains.

“Growing guest counts is our main challenge,” said an e-mail recap of a September meeting among McDonald’s franchise leaders and company executives. “Over the past 12 months, we have been pretty flat.”

The only way to build a sustainable business is to show progress on three key areas: sales, guest counts and cash flow, the e-mail said. “And today we are making uneven progress.”

McDonald’s declined to comment on the notes summarizing the meeting with franchise leaders.

McDonald’s last week reported third-quarter earnings and revenue that topped estimates as results in markets abroad, such as the U.K. and Germany, helped results. The company’s division known as international lead markets boosted same-store sales by 3.3 percent. It wasn’t quite as rosy in the U.S., where sales increased just 1.3 percent.

McDonald’s has made progress in the U.S. since Chief Executive Officer Steve Easterbrook took over in March 2015, but there’s still work to be done. He’s revamped drive-thru ordering and improved food quality by getting rid of certain antibiotics from chicken and switching to real butter in Egg McMuffins. While the introduction of all-day breakfast and speedier kitchens have provided a bump, they may not be the long-term catalyst the chain needs.

The stock began climbing about a year ago after the breakfast expansion, gaining 26 percent in 2015. But the shares haven’t fared as well lately. Shares fell 1 percent to $111.54 at 9:57 a.m. in New York on Wednesday. The stock had lost 4.6 percent this year, through Tuesday’s close.

“McDonald’s has become less relevant to the younger generations,” said Darren Tristano, president at industry researcher Technomic in Chicago.

Three Areas
To lure more U.S. customers, the company is focused on three segments, according to the the document: diners who frequent the chain for breakfast and coffee, those who go primarily for lunch, and families and children.

“We’ve talked about our main focus being growing guest counts, certainly in the U.S.,” Chief Financial Officer Kevin Ozan said during a conference call last week.

Through the third quarter, McDonald’s comparable customer counts are down 0.1 percent this year, compared with a 3.1 drop in the same period in 2015, according to a company filing. The U.S. restaurant industry also is facing a broader slowdown as consumers dine out less due to the turbulent election season and cheaper grocery-store prices.

To better compete, restaurants are aggressively discounting fare with offers such as 50-cent corn dogs at Sonic and $1.49 chicken nuggets at Burger King. But those deals haven’t helped so far. Burger King owner Restaurant Brands International Inc. and drive-in chain Sonic Corp. this week reported disappointing U.S. sales in the latest quarter.

Last year, McDonald’s U.S. traffic declined 3 percent, following a 4.1 percent drop in 2014. Customer counts also fell in 2013, filings show. To reverse the trend, McDonald’s needs to stick to its core identity of convenience and affordability, while also improving ingredients, Tristano said.

“It’s hard to imagine they’re going to be able to compete with better burger and fast casual,” he said, referring to chains like Shake Shack Inc. and Panera Bread Co. “They have to operate within their customers’ perception of their brand.”


Why fast-food chains are making ‘increasingly outrageous’ creations to get you through the door

September 30, 2016

imrsBy Becky Krystal
The Washington Post
https://www.washingtonpost.com/news/going-out-guide/wp/2016/09/28/why-fast-food-restaurants-are-coming-up-with-increasingly-outrageous-ways-to-get-you-through-the-door/

Call them what you will. A sign of the apocalypse. Unabashed marketing ploys. The anti-kale. However you view the latest splashy fast-food innovations, know this: They’re probably not going anywhere. At least for now.

The latest of these creations to be foisted onto America: Pizza Hut’s Grilled Cheese Stuffed Crust Pizza, which features mozzarella and cheddar baked into a crust that’s topped with bread crumbs and melted butter. Close relatives of recent vintage include Burger King’s Whopperrito and Mac n’ Cheetos, KFC’s Double Down, Pizza Hut’s hot-dog-crust pies and Taco Bell’s Doritos Locos Tacos.

Such creations, often referred to as stunt foods or limited-time offers if they’re temporary, aren’t concocted in a vacuum, especially since they can take months or even years to develop. In the last few years, the trend has grown amid efforts to lure customers back into fast-food restaurants, as well as diners’ quest for novel items to share on social media.

Now it seems like each release is wackier than the last. “Like clickbait, the concepts are so unbelievable, so shocking, so Onion-headline-esque that they work,” said Sophie Egan, author of “Devoured,” an exploration of the modern American diet. “They’re irresistible.”

The wave of headline-grabbing fast-food items has its roots in the recession, when the industry entered a slow-down period that lasted through 2014. “A lot of these companies were trying anything to get customers back” during that time, said Sam Oches, the editorial director of Food News Media.

Ask observers and analysts what particular promotion was the turning point in paving the way for successors, and you’re likely to get one of two answers: KFC’s Double Down, a bacon, cheese and Colonel Sauce sandwich that used fried chicken fillets as a bun, and Taco Bell’s Doritos Locos Tacos. (Not surprisingly, both chains are part of the same parent company, Yum! Brands, along with Pizza Hut.)

Launched in 2012, Taco Bell’s Doritos-taco mashup took two years to develop. The fast-food chain sold 100 million units in the first 10 weeks and surpassed the $1 billion sales mark the following year. “The Doritos Locos Taco was a pivotal moment in our brand’s innovation journey,” said Rob Poestch, Taco Bell’s director of public affairs and engagement.

Coming next year: The Naked Chicken Chalupa with a fried chicken shell.

Why do they do it?
Despite the effort these foods take to develop, most aren’t intended to be sustainable as long-term menu additions. “It’s almost never about making money off the product,” said Darren Tristano, president of the food industry analysis firm Technomic.

In fact, the bestselling items at fast-food restaurants tend not to be the wacky mashups, but the classic offerings — Taco Bell’s standard tacos and burritos, for example.

The point of the limited-time offers, as Taco Bell’s head of social insights, Ben Miller, told the Atlantic, is “getting people in the door.” Tristano also said it’s about taking money away from competitors and making companies seem innovative and appealing.

So why do companies need to invent excuses for you to come in? The main reason is competition, and not just from their immediate fast-food brethren. Fast-casual restaurants such as Cava Grill, Chipotle and &pizza have moved in on the fast-food market and are growing at a faster rate, said Elizabeth Friend, a Euromonitor International strategy analyst. From 2014 to 2015, fast-casual brands grew at a rate of 10.2 percent, compared to 3.1 percent for the rest of the fast establishments.

Years ago, a diner’s only option for getting food quickly was the local drive-through. Now, “It’s really easy to get food quickly with minimal effort,” Friend said, pointing to such delivery apps as UberEats and GrubHub in addition to grocery stores with hot bars and prepared food offerings.

“Convenience is a very strong factor,” Tristano said. And if fast food isn’t as convenient as other options, then brands have got to think of something else.

A crazy fast-food item might be the only nudge a diner needs to walk into a Taco Bell or Burger King. If they’ve seen news coverage or a post on social media, the restaurant might later be at the top of their mind when they’re trying to decide where to go.

Why does it work?
No doubt the visuals are especially compelling and share-worthy, which says as much about consumers as it does about the brands hawking them. “The vast majority of us, we don’t have a lot of exciting things that happen to us” on a daily basis, said Brian Wansink, author of “Slim by Design” and the director of Cornell University’s Food and Brand Lab.

By trying one of these flashy foods and photographing them, people are showing that they’re willing to try something new. And like most food photography, those social media-friendly images are aspirational. They aren’t usually representative of our diet, a cultural disconnect that Wansink, in a study of historic paintings, has shown goes back well before the advent of fast food and the Internet, let alone cameras.

The whole experience suggests that consumers are full of contradictions. We make an effort to eat well but still want to reject the health-food guilt, at least once in a while. “We want to feel that we’ve treated ourselves. We want to feel that we’ve experienced new life experiences, and food is part of that,” Egan said.

Diners are also downright curious to know what something new tastes like, which may be more human nature than food culture. “You just can’t help yourself,” she said.

So what’s next for stunt foods?

As long as people keep paying attention to them and talking about them, the short term expectation is that they’ll become “increasingly outrageous,” Technomic’s Tristano said.

In the long-term, though, the “the tide of consumer empowerment” (see: nutrition labels, the fight against GMOs, etc.) is turning, and people may begin to call these foods out as, well, stunts.

The feeling is that “it will no longer be smart business to rely on stunts, and instead [companies will] start to take more of the cues from what these fast-casual chains are doing,” Egan said, referring to fast-casual’s more customized meals, upscale decor and values regarding the environment, sourcing, health and social issues.

r they might try stunts of a different sort.

After all, Pizza Hut did recently reveal a turntable pizza box.


Will Novelty Foods Fix the Fast Food Slump?

August 15, 2016

1471036997485By Vera Gibbons
http://www.foxbusiness.com/features/2016/08/15/will-novelty-foods-fix-fast-food-slump.html 

Grilled hot dogs. Mac ‘n Cheetos. Beefy Frito burritos. Chicken rings. Hot dog-crusted pizza. The revival of old cult favorites like clear soda and chicken fries.

And now – the “Whopperrito.”

Yup, this burger/burrito hybrid goes national today following successful test debuts in Ohio, Pennsylvania and Texas.

What gives? Why are the fast food chains putting so many weird – if not repulsive – food gimmicks on their menus? “It’s about generating traffic,” says Darren Tristano, president of Technomic Inc., a food service research firm.

There’s been a pullback in the industry, you see. A slump. And everyone’s feeling it – from Shake Shack (SHAK) to Starbucks (SBUX) to McDonald’s (MCD).

“Things were going really well at the start of the year when all the economic indicators that would correlate to positive restaurant conditions were in a good place – gas prices were low, confidence was up, housing was settled – and then in April, the switch turned off even though the indicators were still in place.”

Why? Tristano says there isn’t one specific reason for the softness. “People are buying food from other places – supermarkets, convenience stores; they’re eating at home more; and then there’s the presidential election, which could be a trigger point. It’s really the most tangible explanation anyone can point to—political uncertainty.”

Regardless, consumers – especially those looking ahead and thinking about college obligations and other expenses – are watching their wallets, says economist, Arjun Chakravarti, Assistant Professor of Management and Marketing at the Stuart School of Business.

While the younger set (The 25-year old group without 401ks and exposure to the global markets) is more optimistic about the economy and therefore more inclined to spend (especially in light of slightly rising wages and lower gas prices), says Chakravarti, the reality is that purse strings are pretty tight right now. And they’re not expected to loosen them anytime soon.

In fact, restaurant sales, virtually flat, are expected to remain weak for the rest of the year, according to The NPD Group, an industry research firm.

Is this a warning sign for the economy? “A downturn in restaurant sales increases the likelihood of a recession, but the hope is that it’s counteracted/buffered by expectations for increases in business spending in the 3rd quarter,” says Chakravarti.

Fast food chains aren’t taking any chances. They’re responding by offering aggressive discounts that emphasize affordability, and unleashing innovative, zany mash-ups that are more profitable (Burger King’s “Whopperrito” will sell for $2.99; $4.99 when wrapped into a combo meal.).

Buzz marketing – a viral marketing technique that is focused on maximizing word-of-mouth potential largely on social media platforms – is the name of the game, says Dan Rene, senior vice president at LEVICK, A strategic communications firm. “Fast food chains are engaging customers by selling them an ‘experience’ and this is an ‘experience’ that customers want to be part of, and share—pictures, posts, you name it.”

“It doesn’t matter whether or not customers like the food or what it tastes like. If everyone’s talking about it and the hype results in more foot traffic for the fast food chain, it’s won.”


McDonald’s All-Day Breakfast Sparks a Fast Food Fight

May 9, 2016

by Leslie Patton

http://www.bloomberg.com/news/articles/2016-05-03/mcdonald-s-breakfast-push-sets-off-morning-scramble-in-fast-food

Fast-food joints aren’t hitting the snooze button anymore.

McDonald’s Corp.’s decision to start selling Egg McMuffins all day long last year — meant to help sales during lunch and dinner time — has boosted its morning business as well. That, in turn, has kicked off a scramble among its rivals to find new ways to combine eggs, potatoes and meat for a tasty breakfast.

The latest example is Burger King’s Egg-Normous breakfast burrito, which is being introduced in the U.S. on Tuesday. It’s stuffed with sausage, bacon, eggs, hash browns, cheddar and American cheese and served with picante sauce. The home of the Whopper, which still serves breakfast only during morning hours, also recently added a supreme breakfast hoagie and got rid of slower-selling English muffin sandwiches.

“We’ve invested more in breakfast,” Alex Macedo, head of Burger King North America, said in an interview. “The environment is very competitive.”

Along with adding and deleting items, Burger King tweaked its smaller egg burrito earlier this year, removing green and red peppers and replacing them with hash browns.

Skillet Bowls

Taco Bell revised its morning offerings in March to include $1 options such as skillet bowls and sausage flatbread quesadillas. Subway Restaurants just announced buy-one-get-one subs for the month of May. The catch: They have to be purchased before 9 a.m. And Dunkin’ Donuts revamped its menu boards to focus on all-day choices and started advertising $1.99 Coolatta drinks that are sold at all hours.

The changes come as more U.S. consumers grab eggs and coffee outside the home, according to a study by researcher GfK MRI published by EMarketer.com. Last year, more than 34 percent of Americans reported buying breakfast at fast-food restaurants, an increase from 32.8 percent in 2011. Meanwhile, fewer consumers said they’re dining out for lunch and snacks. Dinner increased less than 1 percent.

McDonald’s all-day breakfast in the U.S. has helped turn around its worst sales slump in more than a decade by drawing more customers throughout the day, including the morning. The plan is surpassing its goals.

Exceeding Expectations

“It’s still exceeding our expectations,” Chief Executive Officer Steve Easterbrook said on a conference call in April. “Whilst we clearly added incremental visits and incremental spend across rest of day, our breakfast business has also prospered.”

Items like Egg McMuffins and hash browns fueled a 5.4 percent U.S. same-store sales increase at McDonald’s in the first quarter. That’s stronger than the most recent quarterly gains posted by Burger King, Dunkin’ and Taco Bell.

“It’s helped drive success, which they haven’t seen for several years,” said Darren Tristano, president of industry researcher Technomic Inc.

After losing customers to McDonald’s all-day Egg McMuffins, Jack in the Box Inc. has been advertising a triple-cheese and hash-brown breakfast burrito. Same-store sales at company-owned Jack in the Box locations may be down as much as 3 percent in the recently ended quarter, the company said in Februar-1x-1y. The chain also is adjusting and improving other breakfast items, CEO Lenny Comma said during a conference in March.

Dunkin’ Donuts said last month that its new menu boards are helping drive breakfast-sandwich sales. It’s also focused on introducing mobile ordering and will start a 1,650-store test in metro New York in May to get customers their morning meals even faster. CEO Nigel Travis says McDonald’s push has actually helped Dunkin’ in the breakfast battle by highlighting that the doughnut chain has the same menu all day. Still, the change has increased competition for diners’ dollars.

“Clearly, the value war is pretty intense,” Travis said in an interview.


10 Nuggets For $1.49? Here’s Why Fast Food Is Ridiculously Cheap Right Now

April 1, 2016

Venessa Wong
Buzzfeed News
Feb 29, 2016
http://www.buzzfeed.com/venessawong/why-fast-food-is-ridiculously-cheap-right-now#.gnYqPoN15

enhanced-mid-31676-1456426625-2

The country’s largest fast food chains have been showering customers with deals after years of losing out to newer, higher-end chains. And now, in a battle for customers who remain loyal to old-school fast food, the big chains are engaged in a brutal price war.
Fast food companies have always targeted lower-income consumers. What’s different now is that these customers are expected to benefit from lower gas prices, falling unemployment, and rising minimum wages, according to research by investment bank Cowen and Company. And as low-income consumers find more money in their wallets, commodity prices are no longer shooting upward as they did in recent years.
As “forecasts for key restaurant commodities including beef, chicken, pork, dairy and wheat are in-line to below long term averages,” restaurants are particularly eager now to take advantage of the lower costs to boost traffic to stores, said Cowen’s report.
McDonald’s announced that starting Feb. 29, customers could pick two of four “iconic menu items” — a Big Mac, a 10-piece order of Chicken McNuggets, Filet-O-Fish or a Quarter Pounder with Cheese — for $5. This deal replaces the even lower-priced McPick 2 deal launched in January, in which customers could get two items — McChicken, McDouble, mozzarella sticks, or small french fries — for $2.
Meanwhile, Wendy’s has been offering a four for $4 deal. Value monger Burger King has an even cheaper five for $4 promotion, as well as an ongoing two for $5 sandwich deal, and 10 chicken nuggets for $1.49. Even Pizza Hut has a $5 “flavor menu.”
“All the major chains have jumped on the dollar pricing in an effort to maintain share against competitors,” said Darren Tristano, president at restaurant consultancy Technomic.


Fazoli’s closes only Las Vegas restaurant

February 24, 2016
Jennifer Robison
Las Vegas Review-Journal
February 17, 2016
http://www.reviewjournal.com/business/fazolis-closes-only-las-vegas-restaurant

1004922526_fazolis_021716_3.jpgThere’ll be no more free breadsticks on North Town Center Drive.

Italian fast-food franchise Fazoli’s has quietly closed its lone Las Vegas eatery. The restaurant, behind the 7-Eleven at Town Center and Covington Cross in Summerlin, shut Feb. 8, 15 years to the day after its 2001 debut.

The closure defies broader market trends, as big, national chains including Chick-fil-A and Cracker Barrel prepare market launches for late 2016 and early 2017.

“Las Vegas is definitely a growth market,” said Darren Tristano, president of Chicago-based restaurant consultant Technomic.

So why did operators shutter Fazoli’s?

Company spokeswoman Janet Ritter deferred to the franchisee, Las Vegas-based Glencoe Management, and Glencoe Management didn’t return phone calls. The company’s website said it owns 21 local Burger Kings, including one at 1280 Town Center Drive, next to the former Fazoli’s.

But Ritter said Fazoli’s, a Kentucky chain with 217 U.S. locations mostly in the Midwest and South, “would like to have a presence in Las Vegas, and we are seeking franchisees to open units in the Las Vegas area.”

The Fazoli’s closure capped a market foray that never really picked up steam.

Ritter said she had no information on number or dates of operation of prior local stores, but at least two other Fazoli’s franchises — one on Ft. Apache Road near Rhodes Ranch and another on Eastern Avenue in Silverado Ranch — opened after 2001 and closed years ago.

The 28-year-old company had as many as 300 U.S. restaurants before it began pruning locations in the recession. Each restaurant typically employs 30 to 40 people, Ritter said.

Competition has hurt Fazoli’s, Tristano said.

The U.S. market is saturated with chains, including Panera Bread and Noodles & Co., that serve pasta and pizza. Plus, Fazoli’s straddles a blurry line between fast food and the more upscale fast-casual segment, which includes operators such as Chipotle and Au Bon Pain.

“That’s not a terrible place to be. The problem is, you’re lumped in to some extent with fast food because of the drive-thru and the price points, but the quality is not at the level of a fast-casual restaurant,” Tristano said. “That’s not to say it’s not good quality, but there are so many concepts with customized, prepared-to-order food.”

It didn’t help that Fazoli’s had just a handful of local stores. A franchise needs 20 to 25 locations in a big market to build loyalty and brand awareness, Tristano said.

Still, Fazoli’s seems to have righted its ship: The company said in December that same-store sales were up in 65 of the prior 68 months, including a 3.1 percent jump year over year in November. It opened 10 new franchises in 2014 and 2015.

And restaurant operators continue to salivate over the Southern Nevada market, Tristano said.

“Las Vegas has the demographics and growth that many chain brands are looking for,” he said. “Not all of the markets in the United States are growing, but you’re seeing housing development and population growth there, and that’s a big deal. Chains tend to be prioritizing growth markets.”