Saturday, March 2, 2013

Refocusing Ronald

According to reports by Reuters, fast-food leader McDonald's is dropping the Fruit & Walnut Salad and the Chicken Selects items from their menu.  Additionally, it's currently debating the fate of the "Premium Angus" burger as well.

The shuffling of its menu comes as competitors Burger King and Wendy's have introduced similar offerings like coffee, smoothies and salads and crediting those new items with a major role in closing the gap. It's a move that's reportedly prompted by the expectation of slower sales and profit growth in the coming months, due to a lackluster consumer economic outlook.  However, it's fair to assume that if these items were top sellers, McDonald's wouldn't eliminate them.  And a recently deleted Facebook post by a McDonald's franchisee echoed such reasoning.    

It's a shrewd strategy by McDonald's to refocus on cheap.  Consider that it takes multiple "sometimes" customers who may order a premium salad to equal one regular customer who typically visits for a Big Mac.  That regular customer has always been going to McDonald's for a cheap, fast and easy meal.

It's becoming more difficult and unrealistic for McDonald's and the other "fast food" chains to compete on the higher end of the menu as a steady rise in quick-serve restaurants are claiming this for themselves.  Holding a stronger position on "cheap" should benefit McDonald's as they affirm the position to its regular customer base as well as catch a eaters who move down the market in sluggish economic conditions.

It will be interesting to see if Burger King and Wendy's will follow suit, as they have recently credited the expansion of their menus with gains against McDonald's.

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