McDonalds

Burger King

McDonald's CEO
Reveals The Brand's 4
Biggest Problems

Long Live the King

McDonald's is struggling to get back on top.

Having kicked the Burger King (the

mascot) to the curb, Burger King (the
chain) has enlisted several A-list
celebrities, from the very beautiful
(Salma Hayek, David Beckham, Sofia
Vergara) to the very Steven Tyler, to push
a new message in its commercials in the
hopes of bringing about a brighter future
for the embattled burger chain.

The fast food giant has lost market share to fastcasual brands like Chipotle and better-burger
restaurants like Five Guys.
In a recent call with investors and analysts, CEO
Don Thompson revealed the four biggest issues
facing the brand and how he planned to fix them.
1. Offering the best value. McDonald's spent
several years experimenting with high-end items
like Angus beef burgers and Chicken Selects. By
focusing on this, McDonald's ignored one of its
biggest strengths.
"Value is one of our grand pillars," Thompson said.
"So we must continue to fortify our position within
this key consumer attribute."
The brand is luring back cash-strapped customers
with offerings like the low-priced Jalapeno
McDouble and Buffalo Ranch McChicken.
2. Customer service. McDonald's drive-thru wait
times have gotten worse over the years, in-part
because of an increasingly complex menu.
Thompson acknowledged this problem and said that
the company was sending corporate representatives
in for a "service reset." This could include adding
more workers and assigning new tasks to existing
ones.
The company is also remodeling European kitchens

After years of struggling, Burger King

seems to finally have turned things
around.

Showcasing Burger Kings various new

menu items, which include smoothies,
salads, and specialty coffee drinks, the
commercials strike a humorous tone,
more silly and fun than the odd
irreverencecreepiness, some might say
of its previous advertising campaign
starring its former mascot.
In contrast to the levity of the starstudded campaign is Burger Kings new
tag line, which is not a silly joke but an
upbeat declaration: Exciting things are
happening at Burger King. It comes after
several years during which exciting
things were not happening at Burger
King. In fact, quite the opposite.
Formerly McDonalds strongest
competitor, Burger King has lost a lot of
ground over the last decade. According to
Advertising Age, McDonalds was 101

for faster food assembly.

3. Marketing. Thompson is aware that many view
McDonald's as unhealthy junk food. This problem
has been exacerbated by a food factory scandal in
China. To improve public perception of the
company, McDonald's is doing a global audit of the
marketing department. Thompson said he planned to
make new internal hires.
"We are also strengthening our creative messages by
placing greater emphasis on the quality of our food
and again re-establishing the emotional connection
that our customers associate with the McDonalds
experience," Thompson said.
4. Simplifying the menu. McDonald's menu has
grown 70% since 2007. The new menu items are a
burden on employees and have helped contribute to
long wait times. Franchisees are also angry about
the overloaded menu, saying that the extra
ingredients and equipment were costing them
money.
Thompson stressed that the restaurant was going
back-to-basics.

percent ahead of Burger King in average

domestic revenue per unit in 2010, more
than double its lead from 10 years earlier.
While McDonalds is far ahead of the
entire quick-service packat more than
$34 billion, the chains
domestic system-wide sales were triple
its closest competitor, Subway, in 2011
its recent triumphs stand in sharp contrast
to Burger Kings struggles.
Burger Kings downturn started in the
early 2000s, when major franchisees
publicly aired grievances with the
company. Since then, the chain has
passed into different ownership several
times and jumped on and off the public
markets every few years. (The company
recently announced plans to list its shares
on the New York Stock Exchange
through a merger with a London-based
investment company.)

During that period, McDonalds

"We are streamlining our merchandising menu board expanded its menu through the McCaf
and product offerings and in addition to making it
an extensive line of specialty drinks,
easier for customer to order their favorite products,
including various coffee drinks, fruit
this will reduce complexity in our restaurants which smoothies, and ice cream shakesand a
in turn should enhance accuracy and speed of
line of salads and wraps designed to
service," he said.
attract health-conscious consumers.
Burger King, on the other hand, doubled
http://www.businessinsider.com/mcdonalds-ceo-ondown on its core customer (young males
company-strategy-2014-8?IR=T
with an appetite for burgers) and
effectively forfeited a lucrative new
consumer base to McDonalds.
McDonald's Has a Millennial Problem

Country's Biggest Fast Feeder

Doesn't Rank in Top 10 Fave

The mistake in this strategy became

painfully apparent when the Great

Restaurants Among This Huge

and Influential Demo
By Maureen Morrison. Published on March 25,
2013. 21
McDonald's may be the country's No. 1 fast-food
chain and one of its most-beloved brands, but
when it comes to millennials, the Golden Arches
says it doesn't even rank among the demographic's
top 10 restaurant chains.
It's enough of a concern that McDonald's is
launching its biggest product of the year,
McWrap, to court a huge and influential cohort
that values choice and customization. According
to NPD Group, there are 59 million people ages
23 to 36 in the U.S. -- the range it defines as
millennials.
McDonald's isn't the only major marketer trying to
reach millennials. Everyone from Coke and
Gatorade to brewers and media companies are
struggling to understand this group. There's even
confusion about just who millennials are in terms
of age range (restaurant consultant Technomic
counts them as 19-to-34-year-olds; McDonald's,
in an internal memo obtained by Advertising Age,
classifies them as ages 18 to 32). Size estimates
for this demographic group range anywhere from
59 million to 80 million.
But on one thing most marketers agree: "They're
80 million [people] but they're influencing the
next 80 million, both younger and older," said
Gary Stibel, CEO at New England Consulting
Group.
How to solve the millennial problem? McDonald's
hopes a sandwich item is the key.
"McWrap offers us the perfect food offering to
address the needs of this very important customer
to McDonald's," says the fast feeder's memo,
which notes that "McDonald's is currently not in
the top 10 of millennials' (customers primarily
ages 18-32) favorite restaurants."

Recession hit in 2008, says Steve Wiborg,

president of the corporations North
America branch. As other quick serves
managed to mitigate their losses by
drawing in consumers accustomed to
eating at pricier restaurants, Burger King
struggled to capitalize on the tradedown phenomenon.
I dont think Burger King got its fair
share of trade down when that all
happened because we were speaking to a
very focused individual, Wiborg says.
To make matters worse for Burger King,
the field of burger-centric chains was
growing ever more crowded, with new
concepts like Five Guys and Smashburger
coming on strong and growing fast.
Everyone is scrambling to keep their
distinction in the [burger] market, says
Kathy Hayden, a foodservice analyst with
market research firm Mintel. Every day
theres some sort of new element of
competition.
All of these developments led Burger
King to a crucial moment in the Miamibased chains nearly 60-year history. So,
following its acquisition by 3G Capital at
the end of 2010, Burger King brought in a
new management team, including
Wiborg, and got to work crafting a
strategy to jumpstart the brand.
We needed to take a hard look at
[ourselves], Wiborg says, because over
the last 10 years, we had definitely fallen

Referred to in the memo as a "Subway buster," the

McWrap "affords us the platform for
customization and variety that our millennial
customer is expecting of us." The McWrap comes
grilled or crispy in three varieties -- sweet chili
chicken, chicken and bacon, and chicken and
ranch -- and will range from 360 to 600 calories,
depending in part on the type of chicken.
Said the memo: "Our customers are consistently
telling us, particularly millennials, they expect
variety, more choices, customization and their
ability to be able to personalize their food
experience."
The importance of this ability is clear in the
McDonald's memo. "In fact, they have told us that
if we did not offer McWrap, 22% of these
incremental customers would have gone to
Subway."
When asked to comment on the memo, the
company said only that "millennials have and will
continue to be an important audience for us at
McDonald's."
Millennials are indeed going to burger chains, but
they are going less often. The hamburger category,
which includes McDonald's, Wendy's and Burger
King, still receives 29% of all millennials' quickservice visits, according to NPD, more than any
other restaurant category. Fast casual, which
includes chains like Chipotle, gets 6% of
millennial quick-service traffic.
But hamburger chains have seen a 16% decline in
traffic from millennials since 2007, NPD said. In
the year ended November 2012, millennials made
3.6 billion visits to hamburger chains, down from
4.2 billion visits in the year ended November
2007. There was a 12% decline in quick-service
restaurant visits by millennials in the same time
period.
The means of reaching millennials might be
higher-quality products and lots of choice. The

behind our competition.

The intensive brainstorming sessions
(roughly nine months worth, Wiborg
says) yielded a four-pillar, $750 million
strategy that Burger King announced in
April. The first pillar of the strategy is the
menu expansion. From mango and
strawberry-banana smoothies, Garden
Fresh salads, chicken wraps, and crispy
chicken strips to mocha and caramel
frappes, the expanded menu takes cues
from both McDonalds and Starbucks in
an attempt to broaden Burger Kings
consumer base beyond young males to
include women, families, and the healthconscious.
I think it is important to make sure you
have a menu that applies to not just one
segment of consumers, Wiborg says.
Especially when you consider that half
the population is female and half is male,
and then when you really dial that into a
1834-year-old target, youre now really
limiting yourself. So [the menu
expansion] is really about opening the
target and making sure the menu is
there.
After Burger King announced its new
menu items, some analysts jumped on the
chain for merely copying its competitors.
They should be focusing on
themselves, says Jeff Davis, president of
Sandelman & Associates, a foodservice
consumer research firm. People dont
need another McDonalds.

group has caused fits for big beer marketers in

recent years as it changes drinking habits in search
of variety rather than remaining loyal to certain
brands or styles as previous generations had.
Brewers have responded with new brands and line
extensions, such as Bud Light Platinum, which
has shown early success in nighttime drinking
occasions.
Mr. Stibel notes that when his firm researches
beer trends, "we don't research the average user;
we research bartenders near college campuses,
because we learn what's happening today from
studying younger beer drinkers." He said: "It's like
a python swallowing a mouse -- you watch that
trend reverberate through the population."
Mr. Stibel said there are three reasons reaching
young adults is important, two of which are not
new: Marketers want to reach young consumers as
they start earning more money and forming
families, and younger generations have been the
source for trends in fashion and food. But the third
reason -- the new one -- is that older consumers
are increasingly learning from their children, such
as how to use apps on smartphones.
Media companies, too, are catering to millennials.
Participant Media, the company behind films like
"Lincoln" and "The Help," is launching a cable
network targeting the demographic this summer
positioned as a vehicle for content that inspires
social change. Participant believes the generation
has the strong desire and capacity to help change
the world.
Technomic research seems to agree; it finds
millennials place a high value on attributes like
social responsibility, sustainability, local, organic,
grass-fed and hormone-free offerings when it
comes to dining out.
Aside from being socially conscious, Participant
Media said the millennial demographic is the one
that pay-TV providers are most at risk of losing,

As a counter, Wiborg says: It wasnt

about doing things first for us, it was
about doing things right.
In crafting the new menu, Wiborg says
the new management team looked at the
fine details. It wasnt OK to get the
lettuce and tomatoes pre-cut from a
commissary, he says. We wanted that
done in house because freshness was a
big focus. The goal, ultimately, is to
differentiate Burger Kings food from a
wide spectrum of perceived competitors.
Anyone that sells food, even a grocery
store, is a competitor to us, Wiborg says.
Even though you might look at our new
products and say, Hey, those arent new
I can get those somewhere else, we
believe that they are differentiating, that
theyre best in class.
The second pillar of the strategy is Burger
Kings new marketing campaign. The
previous campaign, featuring the nowretired King, was in some ways a fitting
symbol of the chains recent history:
Aggressively geared toward young males,
the mascot wore the forced smile of a
restaurant owner who is watching another
dissatisfied customer leave his restaurant
in favor of a competitor.
The new marketing campaign couldnt be
more different. The masked mascot is
gone, replaced by a slate of celebrities
with instantly recognizable faces (in
addition to the aforementioned celebs,
Mary J. Blige and Jay Leno are also now
on the Burger King payroll). Gone, too, is

and it believes the network could provide a new

way to watch TV. Participant acquired the
Documentary Channel in December and has
agreed to buy the distribution assets of Halogen
TV from Inspiration Networks. Participant will
combine and rebrand the services as a new
channel, which will be available to about 40
million subscribers.
When it comes to using media to reach
millennials, marketers are revamping their
strategies; the tried-and-true tactic of saturating
the big broadcast networks with beer ads just
doesn't cut it. MillerCoors, for instance, has struck
a deal with Turner Broadcasting that makes the
marketer's brands the only beers featured in
product placements on TNT and TBS, from cans
and barware to tap-handles and even trucks, Ad
Age reported last week.
"They grew up with DVRs. They grew up being
marketed to through video games. We have to be
more relevant than 10 years ago," said Stevie
Benjamin, the brewer's media director.
Coke and Gatorade are two marketers doing
something right to reach millennials: More than
half of consumers ages 13 to 34 are drinking those
beverages at least once a month, according to
Consumer Edge Research. Gatorade outperforms
with people under 24, with 57% grabbing the
sports drink at least once a month. And Coke is
more popular with those older than 25, with 55%
drinking the soda at least once a month.
Coke has been aggressive in targeting youth,
especially in recent years. It has focused on music
as a conduit to the cohort and has been cultivating
communities across social-media platforms.
Gatorade keeps tabs on social conversation
through its "Mission Control" monitoring center;
it also connects with athletes one-on-one through
camps, as well as locker-room and sidelines
programs.

the odd humor, replaced by a brand of

comedy with much broader appeal.
In our consumer research, we learned
that people are very passionate about this
brand, but [for some of them] it had been
a while since theyd been back and
Burger King was not talking to them,
Wiborg says. That was the case with a
lot of the females we talked to. The past
advertising didnt click.
Still, if the new commercials do a better
job of communicating with women by
focusing on the chains new, healthier
menu items, they dont altogether forget
about its core customersyoung males
who probably dont mind seeing
Colombian beauty Vergara seductively
feed her coworker by hand.
The third pillar, improving operations at
Burger King restaurants, is the most
important part of the overall strategy,
Wiborg says. One common complaint
over the last several years has been
inconsistency from one Burger King to
another, an issue that can spell disaster
for a quick-service chain. To address the
problem, Wiborg says, Burger King had
to change how we did things as a
franchisor.
First off, that meant settling a longstanding legal dispute between Burger
King and the National Franchise
Association (NFA), which filed a lawsuit
on behalf of Burger King franchisees
after the chain priced its double
cheeseburger at $1 on its Value Menu.
[The franchisees and Burger King] were
almost like two brands, and it was really
important to me and this management

By the time marketers finally have millennials

figured out, it may be time to move on. According
to U.S. Census data, 46% of households headed
by a millennial adult ages 20 to 34 in the U.S.
have kids, which means marketers will be -- or
should be, anyway -- focusing on marketing to
millennials as parents.
How to Make More McMillennials
Generalizing for a group of people who are sometimes
upwards of 15 to 20 years apart can be a dangerous
move. Some demographers would even separate
millennials into a few distinct subgroups. But there are
some common themes and values held dear among all
millennials.

Fresh and organic food: Millennials place an

emphasis on the importance of organic and fresh
food. Fast-casual chains do well with the demo
because many of them promote a fresh or organic
message.
Variety and customizable products: In the food
world, millennials appreciate the ability to build
their meals from an array of choices. Chains like
Chipotle and Subway do well in this regard
because each item is made to order.
Social change: Millennials care about social
issues and tend to support companies that are
actively helping address problems across the
globe.
Sustainability: Particularly with food, millennials
value companies that are proactive with
sustainable farming practices and are
environmentally conscious.
Social-savvy brands: Brands that have active
Facebook and Twitter pages and engage in
conversations with customers tend to have more
long-term support from millennials.
http://adage.com/article/news/mcdonald-s-1-rankmillennials/240497/

team that we move together as one

brand, Wiborg says. The NFA ultimately
dropped the lawsuit after Burger King
promised franchisees more input on Value
Menu pricing and the length of limitedtime offers.
Another major change in the way Burger
King did things as a franchisor came in
personnel: Burger King added 110
franchisor-franchisee liaisons to its roster,
going from 50 people in the field to 160.
The new management team also went on
a 58-city tour of Burger King locations
across the country to introduce
themselves and their new vision for the
chain to franchisees. Furthermore, Burger
King created three committeesa
restaurant council, a marketing council,
and a people councilthat are made up
of franchisees and Burger King corporate
employees to facilitate cooperation
between the two camps.
After years of being on rocky terms with
its franchisees, the new approach is the
result of hard-earned wisdom.
Its a lot easier to sell something to our
system if you have the franchisees as part
of the plan, Wiborg says. Thats
something we believe in whole-heartedly
in running this brand. In a 90-pluspercent franchise system, its about
execution. We can have the best plans in
the world and if its not being
executed well and our franchisees dont
believe in it and theyre not living it, it
has no chance of winning.
The last pillar of the four-part strategy is
location renovations. Again, Burger King
is following in the category leaders
footsteps (McDonalds is in the middle of

a billion-dollar makeover of the majority

of its stores) but the adage better late
than never nonetheless applies to Burger
King.
So does now or never, says one analyst.
It has less to do with following
McDonalds and trying to compete and
more to do with, If we dont do it, were
not going to be around in five years,
says Darren Tristano, executive vice
president at Chicago-based consulting
firm Technomic, about Burger Kings
overall strategy.
Perhaps with that in mind, Burger King is
promising an improved restaurant
experience with enhancements at every
one of its more than 7,200 locations,
including digital menuboards to replace
the traditional slat-and-slide boards, new
employee uniforms, and new packaging.
As for the pace of the updates, Wiborg
says more than 1,400 locations are
already signed up for reimaging and that
40 percent of all stores will have
undergone the limited renovation within
three years.
Burger King only had 300 franchisees
coming up for mandatory remodeling, so
it offered royalty reductions and
discounts on fees to encourage
franchisees to renovate their stores early.
The chain also created a $250 million
lending facility to give those franchisees
easy access to funding for the reimaging
and to pay for the $31,000 worth of
equipment needed to prepare the new
menu items.
Its been a real partnership, Wiborg
says.
Having set its $750 million reinvestment

into motion, Burger King now must carry

out all four pillars of its new strategy to
maintain its place in the increasingly
competitive burger market, let alone to
start climbing the ranks in the quickservice sector. Much of the onus, Wiborg
says, is on the chains franchisees.
Without them executing our plan, we
dont have a chance, he says.
But after leading what amounted to a
corporate soul search, Wiborg is
confident in Burger Kings future, even if
he understands that the path ahead will
not be easy.
We have some catch-up to play, he
says. The industry changes and what
consumers want from your brand
[changes], and your brand has to change
with the times. And Burger King didnt,
in my view, for a number of years.
Eager to make up for that lost time,
Wiborg is quick to make it clear that,
despite all the exciting things happening
at Burger King, some things will never
change.
How we communicate and our menu
may be a little different from what its
been over the last 10 years as business
has changed, Wiborg says, but were
the home of the Whopper.
Somewhere in his retirement, the Burger
King must be smiling.
http://www.qsrmagazine.com/reports/longlive-king
31 July 2013 - 8:10pm | posted by Jennifer Faull

McDonalds stock
plummets but its brand

Perceptions of
McDonald's,

perception hits a high

in key markets
McDonalds stock plummets but its brand
perception hits a high in key markets

Wendy's decline;
Burger King on the
rise
Aug. 25, 2014

McDonalds reported disappointing results for the

second financial quarter, with sales 0.5 per cent
lower than expected. This resulted in a drop in
share price and the company warning investors it
had another tough year ahead.
On a more positive note, across four key markets
its brand perception is up, according to YouGovs
Brand Index.
Looking at McDonalds Index score (first graph
pictured) - which is a composite of six key
measures of brand health - in the UK, US, France
and Germany, consumers perception of the brand
was better at the end of the quarter than it had
been at the beginning.
In France and Germany, two of its more
challenging markets, the brands Index score
increased the most (up by around four-points in
both countries).
Turning to McDonalds Buzz score (second graph
pictured), which calculates a net score based on
the percentage of consumers who have heard
something positive vs something negative about
the brand, we see that with the exception of the
UK people are hearing considerably more good
than bad about McDonalds.
http://m.thedrum.com/news/2013/07/31/mcdonaldsstock-plummets-its-brand-perception-hits-high-keymarkets

Recent research reveals that customers'

perceptions of McDonald's continues to
plummet, while Burger King brand
perception is on the rise. Wendy's
perception is also in decline.
YouGov BrandIndex surveyed 18,000
fast food eaters, asking them if they had
heard anything positive or negative -about the brand in the last two weeks,
through advertising, news or word of
mouth. Scores range from 100 to -100
and are compiled by subtracting negative
feedback from positive. A zero score
means equal positive and negative
feedback. Margin of error was +/- 3.5
percent.
While perception of the big three burger
chains has been moving recently in
different directions, driven by news,
menu items and other factors, one thing
still remains relatively unimpacted:
Heres how each of the chains has seen
their perception directions changing
lately:
Burger King went from a 9 at the
beginning of August to a current 13 score.
Burger King reached its 2014 high among

recent (last 90 days) fast food eaters at

30% on August 11th.
McDonalds saw its fast food eater
perception levels fall from 13 in mid-May
to its current 2 score, their lowest levels
in four years. Documented problems
include falling out of favor with
millennials, complaints about customer
service, as well as highly-publicized
protests over labor conditions and wages.
Despite negative customer perceptions,
more than 50% of recent fast food eaters
say they have patronized the brand in the
last 30 days, beating Burger King or
Wendys scores by a wide margin.
Wendys Buzz score has dropped from 21
to 15 over the past two weeks.
http://www.qsrweb.com/news/perceptions-ofmcdonalds-wendys-decline-burger-king-onthe-rise/
Is McDonald's Losing That Lovin' Feeling?

Sales Are Soaring, but Its Brand

Perception Isn't Keeping Pace
By Maureen Morrison. Published on February 20,
2012. 6
Most marketers would love to be McDonald's.
It's the world's largest fast feeder by sales. Global
same-store sales rose 5.6% last year over 2010 -its eighth consecutive year of positive same-store
sales. It's rated the world's No. 6 brand by
Interbrand, with a value of $35.6 billion. It's the
26th-largest advertiser in the country, with a
budget of nearly $888 million for U.S. measured
media, according to Kantar Media. Indeed, the
GoldenArches are a global beacon of success, and
the company's 33,000-plus locations in 119

Burger King's
Satisfries boosts
brand among
health-focused
consumers
Oct 8, 2013 Mark Brandau
What is in this article?:

Burger King's Satisfries boosts

countries serve 68 million people a day.

Design But something strange is happening on
McDonald's soaring arches: Its brand perception isn't
keeping pace with sales. According to people close to
the company, its internal tracking system finds that
McDonald's consistently ranks near the bottom in
quality perception when compared with rivals.

The company is working to close the gap, these

people said, by addressing issues related to
perceptions about its food's quality, sourcing and
nutritional value; sustainability practices,
including suppliers' treatment of animals; service;
and condition of stores.
"The future is going to be so transparent that
major corporations should wear underwear that
fits," said Scott Bedbury, CEO at Brandstream,
who praised McDonald's move. "For any
company to ignore what consumers are saying and
instead take comfort in their revenue numbers is
ill-advised."
Heather Oldani, McDonald's director-U.S.
communications, said that though concerned is
too strong a word, the company recognizes that
"there is an opportunity for us to answer some of
the questions that customers may have, that
influencers may have, about our menu, our
commitments to the community and in the areas
of sustainability -- things that frankly we haven't
been as vocal about ... in the past.
"We're actually going out there and having a
dialogue ... about areas that we are making strides
in, and [we] also hear feedback," Ms. Oldani said,
citing the "Listening Tour" last summer and
outreach to key constituencies such as moms.
Make no mistake: McDonald's does not have a
bad brand image. It consistently ranks high on
convenience and price in numerous studies.
According to Millward Brown, it's the fourthmost-valuable brand on the planet, with an
estimated brand value of $81 billion in 2011, up

brand among health-focused

consumers

Burger King builds buzz

Something to talk about

A recent study suggests the rollout had a

bigger impact than the latest health
initiative from McDonalds.

Satisfries have fewer calories than Burger

King's standard French fries.
Advertisement
Burger Kings latest efforts to improve its
perception among health-focused
consumers has been successful so far and
could have more staying power than
similar efforts from McDonalds,
according to industry watchers.
On Sept. 24, Burger King introduced
Satisfries, a lower-calorie version of its
French fries, and followed the rollout
just two days before McDonalds pledged
to offer more salads, fruits and vegetables
during the annual meeting of the
Clinton Global Initiative.
Burger King also followed up the rollout
of the new fries with a PR stunt on Oct. 2
in which it changed the brands website
and signage in a few markets to read,
Fries King, formerly Burger King.

RELATED

23% from 2010. Harris Interactive, which just

released its 2012 Reputation Quotient study, gave
McDonald's a 71.77, or "good," score.
Jeff Davis, president of Sandelman & Associates,
a market-research firm specializing in foodservice businesses, said that McDonald's rates
high in variety, indulgence, affordability, kid
appeal and convenience. But the flip side to those
results is that the chain rates weak on taste,
quality, healthfulness and friendliness.
A recent Sandelman study gets to the heart of the
matter.
It found that what works for McDonald's is a
massive system that motivates not only "highly
satisfied" customers but many who are highly
satisfied with only one aspect, such as breakfast,
drive-thru, or value. In other words, even those
who aren't "lovin' it" visit McDonald's for one
reason or another, such as kid appeal or grab-andgo options. The challenge is to get them to like it
for a wider range of things.
Since staging a turnaround early last decade,
McDonald's has been ambitiously expanding its
menu offerings beyond its traditional staples of
burgers, fries and shakes. Innovations include the
massive McCaf rollout, updated salads, oatmeal,
smoothies and frapps, and a modified Happy
Meal with fruit.
Industry experts credit McDonald's for
recognizing an opportunity in offering healthful
fare, as well as being savvy about owning every
part of the day with items such as snack wraps.
Even so, one executive close to the business said
that McDonald's is primarily seen as a burger-andfries chain.
"Until they can [change that view], they're going to
have a hard time exponentially growing," the executive
said.

McDonald's has also been plugging away with

U.S. store remodels, which have a more
contemporary look and feel. Many locations are

Burger King introduces lower-calorie

fries
McDonald's to serve more fruits,
vegetables
More restaurant marketing news

One industry observer, New England

Consulting Group chief executive Gary
Stibel, called the low-calorie fries and
corresponding marketing campaign an
intelligent move for Miami-based Burger
King. What theyre doing is very smart.
What theyre saying isnt that they
have low-calorie fries, but that they have
great-tasting fries with fewer calories,
Stibel said.
He also praised McDonalds recent
announcement, calling it yet another
incremental move on top of what theyve
done for healthfulness, which is a lot.
However, Stibel noted, Burger Kings
announcement is even more powerful
because while McDonalds says, We
have all these other good things for you,
Burger King is quietly saying that it is
making what consumers already want
better for them. Burger King is also
toying with the consumer with that name
change to Fries King and making a bigger
deal out of this.
Yet he thought the development of
Satisfries was a more significant change
for Burger King, allowing the brand to
compete by altering a standard menu item
in a way that would let more people eat it

installing TVs and lounge areas to bring more

customers inside; drive-thru is estimated at more
than two-thirds of the chain's U.S. business. Some
have also expanded hours to capture the late-night
crowd.
"For a market leader, they've been really
aggressive in a pretty fundamental way, but at the
same time not losing the core of who McDonald's
is ," said Kevin Lane Keller, professor of
marketing at the Tuck School of Business at
Dartmouth College.
Some of its recent marketing and PR initiatives
make it clear that McDonald's is trying to improve
perceptions on key fronts -- such as the origins
and quality of the food it serves, that a "McJob"
puts a worker on a dead-end track or that Happy
Meals are bad for kids.
In April, the company sought to add 50,000
employees to its already 600,000-strong U.S.
workforce on what it called National Hiring Day.
The event was created by Citizen2, an agency
whose "approach is based on strategy that is
oriented to managing and shaping public opinion,"
according to its website.
And in July, responding to groups concerned
about childhood obesity, McDonald's announced a
revamp of the Happy Meal, with fewer fries and
more fruit, among other changes.
McDonald's has long been in the hot seat about
kids, pressured to stop marketing to them and
even to jettison Ronald McDonald. (Publicis
Groupe 's Leo Burnett handles Happy Meal
marketing.) The chain has repeatedly stood by its
clown.
At the annual shareholder meeting last year, CEO
Jim Skinner said that the mascot was "an
ambassador for good," referring to the Ronald
McDonald House Charities.
In January, it started a national campaign created
by Omnicom's DDB, Chicago, highlighting

or eat more of it, similar to the

development of light beer.
Brewers said, We know you, and we
know that you like beer, so this allows
you to drink more of what you like to
drink, Stibel said. Burger King is
moving in that direction, saying, We
know you love your French fries, so well
make them less caloric.

Burger King builds buzz

(Continued from page 1)
A new survey supports Stibels notion
that Burger King helped its perceptions
among consumers with the introduction
of Satisfries, perhaps even more than
McDonalds did with its announcement
that it would let customers substitute side
salads for French fries in its meals.
According to consumer perception
research service YouGov BrandIndex,
since the Satisfries launch, Burger King
improved its measurements of buzz and
word-of-mouth promotion among two
key constituencies: parents and adults
who consider themselves to be in good or
excellent health. While McDonalds also
improved those metrics with the same
consumer groups, the data showed Burger
Kings gains to have slightly more
staying power.
BrandIndex calculates its buzz score by
surveying thousands of consumers every
day about different brands, asking, If
youve heard anything about this brand in
the last two weeks, was it positive or
negative? Negative responses are

suppliers. The ads feature potato, lettuce and beef

producers to show consumers some of
McDonald's food sources.
"We acknowledge that there are questions about
where our food comes from," Neil Golden,
McDonald's U.S. chief marketing officer, told Ad
Age at the time. "I believe we've got an
opportunity to accentuate that part of the story."
"This is a journey," said Ms. Oldani. "I would
equate the suppliers' story as maybe the first
chapter of that story, and we know that there are
other chapters to come [that we] need to continue
to share and get feedback on."
McDonald's also said last week that it was
working with suppliers to phase out the use of
gestation crates, roughly 2-by -7-foot crates that
house pregnant sows. This came after the chain
confirmed several weeks ago that it had
discontinued using so-called pink slime -- beef
scraps treated with ammonium hydroxide and put
in burger patties.
Late last year, McDonald's dumped one of its
suppliers, Sparboe Farms, after reports of
unsanitary conditions and animal cruelty.
Ms. Oldani said that while some of its moves have
been characterized as reactionary, the company
has had relationships with nongovernmental
organizations -- including the World Wildlife
Fund, Japan Ministry of Environment and the
Sustainable Agriculture Initiative -- for 20 years.
Larry Light, president-CEO at Arcature, former
McDonald's global CMO and the brain behind the
"I'm Lovin' It" campaign, said all companies have
"many drivers of trust," including whether the
consumer experience has been consistent and
whether the brand has met expectations. Integrity
is important with any company, and how it treats
customers, employees, animals and the
environment is a part of that equation, he added.
McDonald's has come a long way back from a low

subtracted from positive ones, and each

day a moving average is calculated
between negative 100 and positive 100,
with a zero rating denoting neutral buzz.
Burger Kings buzz score among healthfocused respondents rose from 14.9 to
16.1 the day Satisfries rolled out on Sept.
24, peaking at 19.3 for three consecutive
days the next week and settling at 15.5 on
Oct. 3.
Among parents, that score for Burger
King was 23.7 on Sept. 24 and peaked at
28.4 three days later. Burger Kings buzz
score among parents had been as low as
1.4, its score 10 days before the Satisfries
launch. By Oct. 3, the brands buzz score
settled at 17 with parents.
By contrast, McDonalds buzz score
among consumers rating themselves in
good shape rose from 6.8 the day before
to 8.8 on Sept. 26, the day the Oak
Brook, Ill.-based chain announced
changes to its menu that would allow for
more fruits and vegetables to be sold to
adults and in kids meals. That score
peaked at 15.3 two days later and ended
at 13.2 on Oct. 3.
Parents rating of McDonalds buzz rose
from 28.3 to 32.4 on Sept. 26, rising as
high as 35.9 the next day, before falling
sharply and ending at 7.1 on Oct. 3.
In other words, Burger Kings buzz score
ended the period higher than
McDonalds, for both health-focused
respondents and parents.

point in the "90s, when it struggled with

operational problems, from food quality to store
cleanliness. Industry experts say that it was overly
focused on expanding its footprint quickly and
that employees were not properly trained. It had
also lost its marketing message. The chain slashed
jobs and closed underperforming locations.
McDonald's brought in Jim Cantalupo and Charlie
Bell to lead a turnaround. Mr. Light led the
marketing revamp and is widely credited with
transforming the way the company goes to
market. After two years of overhaul, McDonald's
was named Ad Age 's Marketer of the Year for
2004. The stock hit an all-time high of $102 in
January, up from $12 in March 2003.
But as long as it sits on top of the category,
McDonald's carries the burden of leadership.
"I don't care whether your name is Walmart Stores
or McDonald's, the bigger targets attract the
attention," said Gary Stibel, founder-CEO of New
England Consulting Group. McDonald's has
improved its image from "five or six years ago,"
in part because of menu revisions and value price
points, he said. But some of the negative attention
was deserved, he added, such as that surrounding
supersizing.

Something to talk about

(Continued from page 2)
BrandIndex also found in its research that
Burger Kings and McDonalds healthfocused announcements drove greater
word-of-mouth promotion, which the
firm calculates by asking its survey
respondents which brands theyve
discussed with friends and family over
the preceding two weeks.
Among health-focused consumers,
Burger Kings word-of-mouth score rose
from 13 to 14.9 the day Satisfries rolled
out, rising to a peak of 16.2 six days later
and settling at 13.2 on Oct. 3. For parents,
the brands word-of-mouth score was
23.7 on Sept. 24, when the new fries
launched, and reached a peak of 28.4
three days later before falling steadily to
16.2 on Oct. 3.

McDonalds word-of-mouth score among

health-focused consumers rose to 24.8 the
day it announced its fruit-and-vegetable
Morgan Spurlock's documentary "Super Size Me," in
which he ate nothing but McDonald's for a month, won initiative, compared with 23.4 the day
before. It reached a peak of 26.7 two days
an award at the 2004 Sundance Film Festival a month
before the company ditched the option. It said at the
later and also fell steadily to 18.7 on Oct.
time that removing the menu had nothing to do with
3.
the film.

Marketing and behavioral experts argue that

McDonald's has a problem in that liking it carries
a stigma in some social circles. One executive
close to the business said that customers' opinion
about the chain doesn't always correlate with what
they do.
"People won't articulate their love of McDonald's,
[even though they] really like it -- it serves their
needs," the executive said.

Parents word-of-mouth score for

McDonalds which ranged widely
from a low of negative 10 on Sept. 14 to
32.4 on Sept. 26, when the brand made its
announcement peaked at 35.9 the day
after the chain said it would sell more
fruits and vegetables. That word-ofmouth score withered the most, to 7.1 on
Oct. 3.

"What you observe is a dissonance between

people's stated evaluations and their behavior,
which is indeed an unstable situation," said Ayelet
Fishbach, professor of behavioral science and
marketing at the University of Chicago's Booth
School of Business.
"Either evaluation or behavior will change," Ms.
Fishbach said. "We often observe that changing
attitudes is easier than changing behavior, and so
McDonald's might decide not to worry too much
about attitudes, assuming they'll follow behavior."
McDonald's philanthropic efforts could help its
overall image, she added.
Though the executive close to McDonald's
predicted that attitudes would catch up with
behavior eventually, there could be a tipping point
at which it goes the other way.
"That's the big fear. Which one wins, people's
stated dislike of McDonald's or their unstated love
of McDonald's?"
http://adage.com/article/news/mcdonald-s-losinglovin-feeling/232821/

Ted Marzilli, chief executive of New

York-based BrandIndex, surmised that
the word-of-mouth score did not increase
as much for McDonalds as it did for
Burger King after their respective
announcements, perhaps because
McDonalds scale and advertising
strength give it a much higher base of
awareness already.
I think this is due to McDonalds being
part of the conversation about the QSR
space to a much greater degree than
Burger King, Marzilli said.
McDonalds does have a higher
percentage of consumers seeing and
hearing things about it, so its
announcement is more likely to get lost in
the sea of other things that people are
seeing and hearing about the brand.
http://nrn.com/marketing/burger-kingssatisfries-boosts-brand-among-healthfocused-consumers?page=1