Posted: Jun 07, 2017
The company figured out that putting customers first did not mean what it thought it did.
Most restaurant and retail chains pride themselves on being customer-focused. In reality, though, while customers are obviously a major concern, they don't drive every decision. McDonald's (NYSE:MCD) demonstrated that for decades when it ignored the No. 1 wish of its customers -- that it serve breakfast all-day long.
This was a pain point for diners who never understood why at a seemingly arbitrary point (11 a.m. in most cases), the breakfast menu got put away in favor of the all-day burgers/McNuggets/Filet-O-Fish lineup. The chain had the ingredients to make McMuffins in the back, but if you overslept, a late breakfast was not an option.
Not offering all-day breakfast opened a door for rivals including Sonic (NASDAQ: SONC), which offers its full menu all day long. There were good, technical reasons for why Mickey D's put its eggs, pancakes, and other morning items away at a specific time of day, but diners did not care about those; they just wanted breakfast whenever they felt like eating it.
That's a lesson it took the chain a very long time to learn. But once McDonald's finally launched all-day breakfast, its success was not just financial; it transformed the company's internal thought process.
ALL-DAY BREAKFAST WAS A TURNING POINT FOR MCDONALD'S. IMAGE SOURCE: MCDONALD'S.
What has McDonald's learned?
The success of all-day breakfast helped the chain understand that its definition of being customer-focused needed to change. CFO Kevin Ozan explained what happened to the company's internal culture during his speech at the RBC's 2017 Consumer & Retail Conference on June 1, which was transcribed by Seeking Alpha (registration required).
"The reality was something like All-Day Breakfast. It was the number one most requested thing here in the U.S. And our reason for not doing it always was it was going to be difficult operationally," he said. "So, I don't know if we could really say we were customer centric when [what] we were really being driven by was 'is that going to be hurting ... our ability to be efficient for operation?' "
That's an important admission and it shows a level of self-awareness many large companies never reach. One simple (albeit operationally challenging) decision to actually give customers what they had asked for put everything McDonald's would do going forward in a different light.
"We changed our mindset to saying, all right, if this is a number one request by customers, how are we going to make this work?" Ozan said.
It's a new McDonald's
In addition to learning that it needs to actually listen to its customers, the fast-food giant also realized that it's OK to be working toward a goal.Ozan called it a change in mindset where progress is valued over perfection. He noted that the company did not roll out its full breakfast menu all at the start of the all-day offering.
"We didn't do everything all at once. That was OK. It was just introducing the idea of having all-day breakfast to people," he said. "Historically, at McDonald's, it was we couldn't do anything until everything was perfected."
That took time, sometimes long enough that when the chain introduced something, the world had moved on. This new way of thinking actually puts customers first and it lets McDonald's react faster to a changing market. Going forward, that's likely to help the company continually fix its menu while developing its business to match what its customers actually want.
By Daniel B. Kline
June 5, 2017
Source: The Motley Fool
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