How has McDonald’s managed to stay relevant all these years?
Before we start talking about McDonald’s, let us closely analyze what went south with Dominos. On Tuesday, 9th August 2022, Dominos packed up their bags completely from Italy. After serving in Italy for 7 years, Dominos shut down its last 29 stores. Dominos entered Italy in 2015, thinking it would serve their American-style pizza, however, this model did not work well it the locals as they preferred their rustic home-style pizza. In fact, Dominos never even opened a store in Naples, where the Margherita pizza was born. “It would have been very strange if [Domino’s] had worked here,” said Gino Sorbillo, who owns a pizzeria in the city. “Naples is a very particular market – it wins on tradition, identity … it wouldn’t have worked if the only goal was to make money.” Dominos never planned on competing with the taste of homemade Italian pizzas, its only USP being quick delivery time/ home delivery pizzas. But this changed during the pandemic when Italian pizza makers started delivering pizzas on their own or by partnering with devilry services. This was the last straw for Dominos which forced its exit from Italy.
But this also got me thinking, how has McDonald’s managed to stay afloat during all this time and that too running its operations in so many countries? By 2025 Mcdonald’s aims to add 200 new outlets to the existing 600 outlets in Italy. You may argue that Mcdonald’s serves burgers and not pizzas, and we agree. But McDonald’s has not only survived but thrived in countries across the world because of one reason – innovation.
McDonald’s knows that running its core business correctly is absolutely necessary for success, but is insufficient to keep it growing. The competitive landscape, today heavily relies on innovation. Expanding into other countries presented the company with new challenges to maintain and improve its position. A new word Glocalization is the combination io global standards adopted by McDonald’s while still bringing in a degree of localization. The company follows global standards across the globe in all processes but its strength in bringing in localization through innovation for its success in every country it operates.
Region-wise Product Innovation
McDonald’s operates in 119 countries, serving 69 million customers, daily. The top three countries are the USA, Japan, and China. However, we see across countries McDonald’s has a different menu, personalized just for their local customers. Menus are tailored to fit culturally and socially accepted norms; Big Mac meals are customized to meet the needs of local audiences. This gives McDonald’s an edge over its competitors. Some examples are; India- Since a majority of people in India are vegetarians and the cow is considered holy to the Indian traditions, McDonald’s altogether scrapped beef, and pork burgers off their Indian menu. This was replaced by chicken. McDonald’s also has a vegetarian menu and has recently launched their butter chicken sauce only for the Indian subcontinent. With the Middle East in mind, McDonald’s has created the McArabia Pita which is served with chicken patties and onions (pork is not allowed due to the predominant Muslim diet). Germans love drinking beer hence McDonald’s in German serves beer! Similarly in Japan, McDonald’s has added menu items that are preferred by their Japanese consumers like Rice Burgers, Teriyaki burgers, green tea ice cream, etc.
McDonald’s continues to add new items to its menu. The McDonalds Happy Meal caters to children, start McCafe after the rise in cafes due to the popularity of Starbucks and the most popular is the McBreakfast menu.
Localization is important for a global company, it helps to stay in touch with their consumers and keep them happy by understanding their needs, first. This has helped McDonald’s to achieve global success by maximizing local techniques. By taking feedback, and studying consumers’ behavior and trends of the locals McDonald’s manages to stay relevant via product innovations.
McDonald’s has managed to maintain consistent quality with very low pricing for its products. As a result of the company’s vision and commitment to becoming a value-driven brand, it recognizes brand affordability as an essential proposition for its sustainability, particularly in a market like India where the majority of customers are middle class, giving them a taste of pure Indian cuisine at an affordable price. When they first introduced burgers to India, they charged less than $50 cents each. Since the burger was a new and unheard-of product in India, it needed to be affordable so that everyone would try it out. Introducing their combo meals, happy meals for kids by adding a toy in each meal, and breakfast menu paved the way for product innovation.
Even though McDonald’s was 40 years, it is far behind its competitors like Wendy’s in adopting the drive-thru style of restaurant. This concept was embraced after McDonald’s realized that military personnel from the nearest cantonment couldn’t get out of their cars while they were in uniform. In order to tackle this problem, they started Drive Thru store near this army base. However, this model would not have worked in India plagued by its lack of infrastructure and owing to the traditional practice of Indian families preferring a restaurant-style layout.
The augmentation of McDonald’s in India shows its success in a highly orthodox market with inflexible eating habits conforming to the concept of a Family Dining restaurant.
Also, McDonald’s owns all the land its outlets are built on. This makes McDonald’s the 6th largest real estate company in the USA. This is done to avoid the varying land cost of renting out the locations. Also, it costs way more to run your own restaurant so McDonald’s just patterns with the local franchises and collects the rent and the profits.
It was McDonald’s that first tapped into technology to make quick service more efficient. McDonald’s has consistently shown a dedication to staying at the forefront of innovation, from the creation of self-service kiosks and digital menu boards to its present tech acquisition spree.
With the global pandemic, Mcdonald’s franchises have accepted the need for modern technology. This was kept in mind to keep the customers and employees safe and create a seamless experience. By taking their approach digital, introducing a personalized drive-thru menu that can tailor according to the current weather, traffic, and trending items, they have reduced the serving time. This also allows the employees to focus on preparing the meals instead of taking orders. The displays have the capability to suggest more things based on the customer’s current choices at the beginning of the ordering process. In some nations, McDonald’s has also started implementing their first voice-initiated application process (Apply via). By utilizing technology improvements, you may enhance your company’s operations, cut costs, and automate procedures, making it easier for your staff and clients.
The vogue of digital transformation is gravitating through all industries, and it is no surprise that McDonald’s is also embarking on this journey. A few years back, McDonald’s invested $6 billion in their ‘Experience of the Future’ redesign, in hopes of modernizing most of their U.S. stores by 2020. Some of these improvements include the revamping of self-order kiosks, refining the lucidity of menu boards, and creating more parking spots for curbside pickups.
McDonald’s success today is largely attributed to its franchising model, consistency, and innovation. Through their glocalization model, McDonald’s was able to thrive in many countries. Since the customer experience is essentially constant across all of their outlets, familiarity functioned as and was maintained as their USP. They continuously attracted new clients and were able to reach new target segments thanks to innovation.
If you need to take your global brand to new heights with the power of glocalization and build a dynamic relationship with your audience, we can help. Just hit us up at [email protected] or check out our website www.luxeveda.com.
To learn more about customer relationships in today’s world read our blog on ‘Dynamics of a good Brand-People relationship.’
August 19 2022