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Running Out of Ideas

With its highly successful McCafe concept keeping Starbucks marketers up at night as well as a reasonably successful extension of their breakfast hours, McDonald's is now looking for more growth in what is now a rather moribund product sector. Fast food has become a low margin business saddled by rising marketing, food, and labor costs and a continued need to improve technology and maintain contemporary restaurants. It's tough to make money in this business, especially if you are running out of new ideas.

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The all-day breakfast concept has its limitations as some consumers get their Egg McMuffin at lunchtime or in the evening rather than in the morning. The net effect has been that too many breakfast sales have simply moved to later in the day and so breakfast for McDonald's remains only moderately improved. But the chain is committed to getting breakfast right, so to speak, and has made a number of changes to the product mix in an effort to energize an area that hasn't changed all that much lately. Indeed McDonald's has long struggled with innovation for decades.

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Marketers recently added Triple Breakfast Stacks, sandwiches that feature a heartier portion of extra meat (for a limited time) and is pushing the pairing of profitable McCafe drinks with menu items in an attempt to get people to spend more at breakfast. In some locations, marketers are also testing muffins, cakes and other baked goods as well as breakfast sandwiches for only a buck. Competitors include just about every other fast food chain who are all vying for greater share of a market that has been shrinking over the past three years.

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But although the breakfast market might be shrinking, it is still more profitable than lunch and dinner since ingredient costs tend to be far lower and fewer workers are generally needed. And so grow breakfast sales they must. There is evidence that an increasing number of consumers want burgers in the morning, and so perhaps there might be opportunity there in the future if demand gets large enough to warrant the added costs involved in opening up the burger grill a little earlier. On the other hand, it might be better if marketers just focused efforts on innovation. A hot, new breakfast product could be a game changer in the way that the Egg McMuffin was long ago and would certainly give marketers at McDonald's something more meaningful to promote. Why is it so difficult for these veteran marketers with their deep marketing pockets to create marketing magic?


Discussion: Do you have any prescriptions for marketers or any new product ideas? Why do you think it has been so difficult for McDonald's marketers to find a hit product over the last few decades?