FilteringCraig

I read today that McDonald’s may be seeking buyers for its smaller diversified food chains. These include Chipotle, the Mexican burrito joint, and Donato’s, a pizza place. The Chicago Tribune is suggesting that this might be proof that the new CEO James Catalupo is going with a “back to basics” strategy to bring McDonalds back to supremacy in the food universe. I don’t think this is the right strategy.

In business school, they teach you that one of the intangibles that a company can have that is an invaluable asset is brand name or brand equity. Nike has the inimitable “swoosh.” Adidas has the three stripes. MGM has the lion that roars before the movies. NBC has the peacock. I could go on for days. McDonalds has the golden arches and Ronald. These are great assets to a company as far as being recognizable and famous. Everyone knows these symbols. The problem is that now they are associated with the wrong things.

The arches have come to represent fat grams. The possibility of ordering a diet beverage with a super-sized meal has become a punch line. Chicken nuggets have become synonymous with mystery meat. Their coffee is always associated with the lady who got serious burns in her lap after spilling it. People still wonder what in the hell Grimace is not to mention how downright scary the Hamburglar is.

So, we have a brand with lots of brand power, but now if I were CEO I would be looking for a way to distance myself from all these images, but how do you spit in the face of your largest asset, the golden arches? How do you recreate an American classic like McDonalds?

I am not sure that you can do anything but wait and hope that America changes its mind about fast food. While you are waiting and hoping for people to come back to your restaurant, you can assume that some other company who offers a replacement service is going to take your sales from you. Is it Burger King? Is it Wendy’s? Is it Subway?

Why shouldn’t it be Donato’s and Chipotle? If someone is going to steal your sales, why not let it be you? While you are waiting for McDonald’s why not try to cash in with other companies. The market size hasn’t changed; the tastes of the market have been changing slowly over time. Just in case people are never going to come back, make sure you are positioned to move on.

One final note I will leave you with is the Procter and Gamble model. Procter and Gamble has products in the same market to appeal to all the different types of people in that market. Let’s take laundry detergent for example. P&G knows that many different types of people are going to buy different types of cleaning products for their clothes. So what do they do? Do they try to convince EVERYONE to buy Tide? No, they have a diversified group of products so that if they are going to lose market share to another product, they will own them all.

Procter and Gamble owns Tide, Downey, Gain, Cheer, Bounce, Era, Febreeze, Dreft, Dryel, Ivory Snow and Bold. That sounds like a good percentage of the choices on a Wal-Mart shelf if you ask me.

My Point is, don’t ONLY try to make everyone love McDonald’s (again.) Make sure if they are going to choose against McDonald’s you are picking up the sale under another name. Which means maybe selling Donato’s and Chipotle is a bad idea.