McDonald’s New Menu Marketing Analytics I

Perceptual Map

Jyoti Swamkar • Mimi Nguyen • Daniela Ulloa • Alessio Zanetto

Brand Value

Total Revenue• US$ 28.1B (2013)

Net Income• US$ 5.6 billion (2013)

Sales• Ave. US$ 2.5M per store• 18% - 40% from food sales

Gross Margin• 38.3% (June 2015)

Channels• 36,000 outlets serve 69M

customers each day in over 100 countries.

Brand Value• US$ 34.7B

Consumer Perception Ranking• 85th place (Forbes)

McDonald’s still holds the largest market share ~17%, and remains the most successful fast-food chain worldwide.

https://drive.google.com/file/d/0Bwv0Irjw9YDgOG8wX2g2SGVDWW8/view?usp=sharing

http://marketrealist.com/analysis/stock-analysis/consumer/restaurants/charts/?featured_post=35362&featured_chart=35361

82% revenues from real estate; 18% from food

sales

60% revenues from real estate; 40% from food

sales

Europe 2012 U.S. 2012

Business Model

STRENGTH

OPPORTUNITY

WEAKNESSBrand. Global brand, industry leader. Largest market share ~17%Biz Model. Shared risks spread worldwide between management, franchisees and suppliers. Maximized & optimized system for training and execution to scale growth.Resources. Real estate portfolio, IP / trademark.Diverse Value. Variety of international dishes, and low-cost menu attract mass market.

Personalize Food. Build your burger kiosks.Technology. Mobile order and pay; web order for pickup or delivery.Localism. Regional menu, e.g. organics, healthy.Re-imaging. Modernize restaurants’ look.Social Responsibility. More awareness around charitable programs to look progressive. Market Development in emerging markets.

Intense Rivalry. Saturated market. Socio-Cultural Factors. Shifting consumer preferences, and info & reviews via the internet.Economic Factors. Increased costs for commodities, wage dispute, exchange rates, austerity measures.Political. Levies, regulations, conflicts abroad.Environmental Factors. Climate change, packaging

Losing Market Share. 30% profit loss 2014 Poor Reputation. Junk food, mistrust, Supersize Me, Fast Food Nation.Low Differentiation. Low-cost & convenience seen as commodity. Quantity for price rather than quality for price.Bloated Menu. increases costs and slow down down service.

THREAT

INTERNAL

EXTERNAL

SWOT

Buyer Power

Potential Entrants

Supplier power

Competitive Rivalry

Threat of Substitute

Porter’s 5 Forces Analysis

HIGH• intense price-driven• low differentiation• saturated market• diverse players• 8.6% industry growth• capacity increase

HIGH• buyer volume • viable substitutes• switching costs• price sensitivity

MEDIUM• capital expenditures• economies of scale• cost advantage• brand equity• regulations• retaliation

HIGH• variety of choices• perceived differentiation• quality • switching costs

MODERATE• viable substitute• effective distribution• differentiation

Would 60% of the respondents in San Francisco consider McDonald’s if it introduces 3 healthy new menu options?

o Minimum of 3 menu options are rated 60% or higher by respondents

New Menu

• Black Bean Burger• Quinoa Kale Salad• Tofu Lettuce Wrap• Apple Celery Smoothie

• Minestrone Soup• Tomato Mozzarella Panini• Mushroom Spinach Omelet

Solution Process

Selection Criteria

• Secondary Research to determine healthy/ organic criteria

Market Survey

•Primary Research•Survey 1: List Top 6 criteria•Survey 2:•Rate McDonalds and its competitors on the criteria•Gauge acceptance rate of new menu options at McDonalds

Spreadsheet Graphing

• Collecting survey results

• Determining Calibration Procedure

• Plotting Perceptual Maps

Spreadsheet Formatting

• Outline the axis and adding data labels to make the perceptual maps readable

Results and Interpretation

• Should McDonald's grow in Health/ Organic food segment in San Francisco?

• Conclusions

ResearchMethod

Sourceso American Customer Satisfaction

Indexo Journals

Findingso Fast-Food Customer Perception

Benchmarko Customer Satisfaction

o Developing Trends Towards Fast-Casual

Final Criteriao Freshnesso Taste of Productso Quality of Serviceo Speed of Service o Food Quality Levelo Cleanlinesso Product Value

Final Criteria

o Friendliness of Staffo Speed of Serviceo Priceo Food Quantity Levelo Operations Hourso Restaurant Locationo Variety of Products

o Food Presentationo Customized Menuo Brand Valueo Nutrition Labelo Restaurant Layouto History Behind Ingredientso Social/Online Trendo Brand Historyo Restaurant Size

FirstSurvey Questions

Primary Research -1

First Survey Results

Over 50

25 to 50

18 to 25

15

1

Criteria AverageFreshness 9.49

Food quality level 9.43

Cleanliness 9.14

Taste of products 9.11

Quality of service 8.65

Product value 8.32

Friendliness of staff 8.30

Speed of service 8.03

Price 7.49

Food quantity level 7.27

Operation hours 7.03

Restaurant location 6.97

Variety of products 6.73

Food presentation/display 6.73

Customized menu 6.70

Brand value 6.68

Nutrition label 6.51

Restaurant layout 6.14

History behind ingredients 5.95

Social/online trend 5.76

Brand history 5.03

Restaurant size 4.27

❑ 100% of respondents are aware of healthy/

organic food

❑ 87% eat organic food more than once a week

❑ Top 6 criteria according to the respondents are determined

❑ Respondents mostly belong to the age group 25-50

❑ Next Steps rate McDonald’s vs.

competitors on criteria

SecondSurvey Questions

Survey Results & Perceptual Map Model

Perceptual Map

Low Product Value

High Product Value

Burger King

Super Duper

Panera Bread

Starbucks

In n Out Burgers Chipotle

Very CleanNot CleanMcDonald's

Low Product Value

High Product Value

Burger King

Super Duper

Panera Bread

Starbucks

In n Out BurgersChipotle

High Service Quality

Low ServiceQuality McDonald's

Low Product Value

High Product Value

Burger King

Super DuperPanera Bread

Starbucks

In n Out BurgersChipotle

Very TastyNot Tasty McDonald's

McDonald's to be

Product Value

Taste of Product, Freshness,Food QualityCleanlinessService Quality

McDonald’s moves to the more tasty, higher product value segment

ASSUMPTION

New Menu at McDonald’s

❑ We asked respondents if they would accept at least 3 new

❑ menu items at McDonald’s

Possible Reasons for Low Acceptance

DemographicsBehavior Pattern

Market Comparison

Location - Category - Channel

• 8 stores• Fast food • Franchises and company owned

• 11 stores• Fast food • Franchises and company owned

• 2 stores• Fast casual • Franchises and company owned

• 50 stores• Fast casual • Licenses and company owned

• 6 stores• Fast casual • Company owned

• 1 store• Fast casual • Company owned

• 9 stores• Fast casual • Company owned

Market ComparisonPrice - ProductTarget market - Objective

• Target: people looking for fast and affordable meal• Objective: reasonably priced quality food, served

quickly, in attractive and clean surroundings

• Target: family, business people, blacks and hispanics• Objective: cheap, fast, convenient food with

memorable customer experience

• Target: urban workers and suburban dwellers • Objective: authentic and fresh artisan bakery in a

quick service menu selection

• Target: young urban adults and tourists• Objective: not only coffee, but a whole experience

around quality treats

• Target: professionals, commuters, tourists, students• Objective: superior quality, environmental

conscious, great experience

• Target: family, young singles, tourists, students• Objective: fresh, made-to-order food prepared and

served by friendly, well-trained people

• Target: millenials (15-35 years old)• Objective: provide food with integrity

Perceptual Map What If? Result

Burger King releases a new menu line centered around “freshness”e.g. Vegetable & Fruit smoothies, Tofu Burgers, Sweet Potato Fries

Burger King & McDonald’s align

(look at data)

McDonald’s chooses to fully dive into the healthy & organic market

based on segmentation

McDonald’s will lose core segment

that aligns with convenience and

favors “unhealthy” as a result of

shifting into a different market

New competitors come into the market & deliver a fast-casual

option for McDonald’s core market

Scenarios

Threat of New Entrants

Market Place Disaster

Intensity of Rivalry

STORE

Insights• Customers may not eat at McDonald’s even if it introduces healthier menus

• McDonald’s strengths lies in product value & needs to maintain its position.

• Burger King is too close to McDonald’s which is a potential threat.

• More representation from lower income household in primary research

• Food freshness is a growth opportunity in San Francisco

Conclusion

• McDonald’s should increase focus on product rationalization• Allowing customers to personalize their food, e.g. build your own burgers, is

an opportunity to improve its product offerings.

Thank you for your attention