Are customized burgers and mobile apps the future of McDonald’s?

Discussion
Oct 22, 2014

For some McDonald’s customers in Australia, the menu just got both bigger and more technologically sophisticated. A video on YouTube shows a customer ordering a customized McDonald’s burger, using an in-restaurant touch-screen to select from a long list of ingredients you would sooner expect to see at a gastropub-style burger bar, then selecting on-screen the seat to which the finished burger will be delivered.

While the tech shown in the YouTube video is positioned in-restaurant, it is not difficult to imagine touch-screen ordering being included as part of a smartphone app. Near the end of 2013, McDonald’s began rolling out its McD App in a few markets in the U.S., into which the ordering tech could presumably be integrated. Companies such as Domino’s have found success with such a strategy. Domino’s recently released 3D Custom Pizza Builder iPad app allows customers placing orders to create a customized pizza through a touch-screen interface.

[Image: McDonald's Gourmet Burger]

McDonald’s may indeed be trying to see how a gastropub format suits the Golden Arches as the company reevaluates its offerings in the face of the growing popularity of fast casual restaurants.

Long seen as a quick, cheap and unhealthy place to eat, McDonald’s is no longer particularly cheap. Bloomberg News reports that the chain’s recent price increases have been driving away budget diners.

Joel Cohen of Cohen Restaurant Marketing Group told Bloomberg, "You’re up at price where you could just about be dining at a casual-dining restaurant."

According to a Forbes.com article, McDonald’s customer traffic has diminished 1.3 percent in each of the past two years, while fast casual restaurant visits have risen by five percent and 2.3 percent in those years. Attempts by McDonald’s to win back customers by offering healthier options, such as wraps, did not work out as well as the company had projected.

Will a shift to customized burgers and app-based ordering make McDonald’s more competitive with fast casual chains in the U.S.? Should the company even be trying to be more competitive with fast casual restaurant operators?

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16 Comments on "Are customized burgers and mobile apps the future of McDonald’s?"

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Dick Seesel
BrainTrust

I am not a McDonald’s regular but I eat there on occasion along with other burger places like Five Guys and Culver’s. So I’m not an authority on the subject (which is a good thing) but it’s true that a value meal approaches the price of a similar combination meal at competitors. (And there are plenty of well-priced, healthier options like Panera to choose from.) The problem lately for McDonald’s is the slippage of food and service standards causing an erosion of the value equation.

I’m not sure that customization will solve the problem of food quality, if the burger at the “heart of the matter” doesn’t taste good. If anything, McDonald’s needs to figure out how to take complexity of menu offerings out of the equation, in order to focus on “doing less better.” That’s part of the secret of Five Guys and In-N-Out Burger, after all—not the lowest price or even the fastest service, but the best food quality for the price paid.

Dr. Stephen Needel
BrainTrust

So McDonald’s is going the way of Burger King, where you can have it your way. As long as it’s the same old burger, not likely to be much of a benefit. And likely to lead to more errors and slower service. I’m not a big fan of the idea—McDonald’s is what it is and I’m not sure a re-stage is going to help it.

Dan Raftery
BrainTrust

McDonald’s troubles stem from their departure from fast, cheap meals. The menu is already too complex for fast service, and cheap appears to be less obvious, compared to other franchises. If they further complicate the order process, it could spell trouble. One thing to keep in mind regarding a mobile phone app for ordering—quality and time/temperature are directly related with fast food. Those burgers need to be eaten very soon after preparation. Adding a time lag between order and pick-up is not wise

David Livingston
Guest
2 years 11 months ago

Australia is a bit different because they have a very high minimum wage. McDonald’s has to get by on fewer yet more productive workers. Talk of raising the minimum wage is probably pushing McDonald’s ahead of the curve to be prepared by taking labor out of the ordering process. I think it would be great to order a $1 McDouble and have them put the Big Mac ingredients on it. One of McDonald’s biggest drawbacks has been the customer-employee encounter. Eliminating personal encounters and improving food quality should really boost sales at McDonald’s.

Gene Hoffman
Guest
Gene Hoffman
2 years 11 months ago

Some mental maven at McDonald’s
Said app-basing isn’t what’s needed done.
But the confident CEO with a smile replied
How will we know till we’ve tried?

So they tried and results have started to slip.
Old coffee and burger patrons are less hip,
They’re a fast declining nation on the wings
While young patrons seek out new things.

Fastest thing in fast food restaurants today
Is the number of places that serve that way.
Mac set the pace for over 50 growing years
But only reinvention will bring future cheers.

Rynder Roy Klomp
Guest
Rynder Roy Klomp
2 years 11 months ago

McDonald’s extremely successful marketing strategy was fair-quality food, great price and a consistent (clean) experience.

While some may disagree with my belief that the food quality is still about the same, prices have increased significantly and a clean store is a challenge to find. McDonald’s might be better rewarded by focusing on price and store operations.

Ed Stevens
Guest
Ed Stevens
2 years 11 months ago

I see this as a lateral competitive move vs. a game changer for them. McDonald’s is in a squeeze between the low end players like Taco Bell/Jack in the Box and fast-casual upmarket players. They need to stay as the best down-market option to win. Chasing fast-casual would be a catastrophe for them—the brand cannot make that transformation.

In that sense, customization at the low end of the market (like Domino’s) would be effective.

Al McClain
Guest
Al McClain
2 years 11 months ago

In my neck of the woods, we seem to have more “gourmet” burger places than anything else. The trend seems to have staying power, but I imagine there is another fad/trend that will eventually replace the seeming obsession with burgers. While the McDonald’s custom burger in the video does look great, and seemingly on par with top-of-the-line burger joints, if not better, I wonder how this will scale. I ate at McDonald’s the other day out of necessity (for the first time in a long time) and was a bit taken aback by the so-so taste of the food. And they haven’t figured out after all these years how to melt cheese, so good luck with gourmet!

Karen S. Herman
BrainTrust

Yes, McDonald’s should try to be more competitive with fast-casual challengers and a digital strategy in the U.S. is clearly in play, with the launch of the McD App in New England. This is a good start, and making the app available via QR code in restaurant displays and on merchandise as well as in the Apple App store and on Google Play, will give a wide range of customers access to the value offers and coupons that will be loaded.

The Pew Internet Project Research on mobile technology as of January 2014 showed 90 percent of American adults have a cell phone with 58 percent having a smartphone. Not surprisingly, the majority of smartphone owners were in the 18 to 49 age range, a strong target demographic for McDonald’s.

As WIFI is currently available in 11,500 McDonald’s across the U.S., I’d like to see the McD App made available to smartphone users in other markets, too, and I’d also like to see the digital display panels deployed. Ultimately, touch-screen ordering on a smartphone is the way to go for McDonald’s to regain customers and relevance in the fast food world.

Gene Detroyer
BrainTrust

BTW…I also saw this app in a McDonald’s in France.

McD’s future is not about app-based ordering. To repeat a previous post…Consumer Reports rated 65 fast food chains. Readers ate 96,208 meals. The question posed to participants was simple: “On a scale of 1 to 10, from least delicious to most delicious you’ve ever eaten, how would you rate the taste?” In the burger category, Consumer Reports rated about 53,745 answers. McDonald’s came in dead last!

An app won’t help you move up from dead last!

McD’s is in a postition, both in business structure and consumer mindset that is almost impossible to change. They are out of step with the trends and are boxed in by what they are.

I gave my students an assignment. “In 15 years, what member of the DJI 30 will no longer be there?” The winner was (or is it the loser) McDonald’s!

Lee Kent
BrainTrust

I would urge McD to look closely at its demographic. I don’t have access to any survey data but from what I see, it appears to be moms on the go with little ones in tow! (Hey Gene, like my rhyme?) They pop in to let the kids play while they get coffee cheaper than Starbucks and check the texts and email.

Does this sound like a customer burger market? Nope, not by a long shot. Some of their smart moves have included more healthy options for the kid meals, like fruit, and good but less expensive coffee.

I don’t even think these moms are in a hurry, so ordering ahead, etc. is not really a big deal. These moms are looking for a little break for them to catch their breath.

Don’t put away the drawing board, McD. You aren’t there yet!

For my 2 cents!

Craig Sundstrom
Guest

Moving upscale is an age-old strategy, but one that doesn’t always work…just ask JCP. Sometimes you need to double-down on your (low)price based model. In a country that’s supposedly becoming ever more bifurcated income-wise, it should be a growth opportunity (at least to the extent that stagnant incomes can be a be a growth opportunity).

Cathy Hotka
BrainTrust

The ultimate customized sandwich comes from Subway, which has a remarkably efficient way to move customers through relatively quickly, but it requires a fair amount of “real estate” in the store. Can the back of a McDonald’s manage this?

Naomi K. Shapiro
Guest
Naomi K. Shapiro
2 years 11 months ago

There’s no question that McDonald’s needs a fresh face—or maybe a fresh, customized burger. On the other hand, the name still attracts, as witnessed by innocents abroad that seek out the McDonald’s stores wherever they are. McDonald’s has its niche, but has to do something to reinvent itself. Maybe this is the answer?

gordon arnold
Guest

The small and economical menu with fast service is what built the empire. Moving away from what got them to giant status is causing the problems they must deal with every day in terms of shrinking sales. I am confident that the call for high fat content meals is all but gone, meaning a new menu should be high on the priority list. But as a group the company just doesn’t get it. If this stagnation isn’t turned around maybe we will see an all new fast food leader.

Jeff Hall
BrainTrust

Attempting to shift consumer perception of McDonald’s from the position of cheap, quick fast food to one of gourmet burgers and gastropub seems implausible at best.

The notion of allowing customers to create their own custom burger will likely translate to incredible pressure on service times, leading to customers waiting in longer queues at the counter.

With menu prices on par with a true fast-casual concept, the question becomes, what is the unique value proposition of McDonald’s, with so many more appealing alternatives now in the market?

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