McDonald’s has been on a roll lately (NYSE: MCD). Its stock is up 41% in 2017 and is at an all-time high as I write this blog. Check it out:
Here is a link to an article on marketrealist.com that analyzes the company:
http://marketrealist.com/2017/12/why-mcdonalds-is-trading-close-to-its-52-week-high/
The purpose of this posting is to provide my opinion as to why McDonald’s has done as well as it has because it could have gone the other way. Remember Burger King? I don’t much, either.
Changes
I don’t go to McDonald’s very often, but I do go sometimes. Have you been there lately? Anyhow, since I go there infrequently, I think that gives me a better sense of how much McDonald’s has changed over the years. It’s like, if you see kids every day, you don’t notice how much and how rapidly they grow, but if you only see those kids once every few months, you think, “My, how they have grown!” That’s me, for McDonald’s. My, how it has changed! Or, try this mental exercise: Think about going to McDonald’s 10 or even 20 years ago, and think about your most recent visit, and then think about how different it is now. Here are some of the changes that I have noticed. I am sure there are others, as well:
- All-day breakfast
- Emphasis on cleanliness (I’m sure there are locations that are dirtier than others, but my sense is they are trying to keep their locations as clean as possible, unlike other fast food restaurants)
- WiFi
- More modern look and fixtures
- TV
- Retirees hanging around and chatting, especially during the morning
- Menu items that come and go, and return again (such as McRib)
- Good coffee
Good Management
Kudos to McDonald’s management for doing all of these things! The emphasis seems to be improving the customer experience in the restaurants. Management saw Starbucks’ success and said, “You know what? We have good coffee, too! And we have a lot of well-located restaurants. And our locations have tables that are conducive to customers sitting down and talking to one another.”
The point is, McDonald’s management didn’t stick to their knitting. Instead, they changed. They innovated. They saw what competitors did that was successful and copied it. They knew their markets and their customers and saw how they could provide a product and a service that was needed. They showed how much they cared by keeping their restaurants clean, by keeping them updated and modern, and by continuing to reinvest back into their business. The McDonald’s brand, the Golden Arches, is known worldwide, as it has been for many years. Management has been wise enough not to squander that strong brand name.
IMO
I think there is a lesson to be learned therein. McDonald’s could have continued to serve hamburgers as they had done for the previous 50+ years. They could have milked their business and pulled as much money out of it as they could and not reinvested back into their restaurants. They could have decided to just tip their hats to Starbucks and not tried instead to go after their coffee business. They could have continued to view themselves as a restaurant rather than a community gathering place. Instead, McDonald’s management looked forward and thought about how to grow their business rather than preserve what they already had. They played offense instead of defense. Not that playing defense is bad, but the only way you can grow is to play offense. You can take that as a lesson for your own business, career, or even your life.