Problems That Make McDonald's Lose The Core Competence

As a fast-food industry giant in the world, McDonald’s was once the first choice of hungry people seeking simple, fast, consistent and economical food for several generations. But the situation has changed along with the different needs of customers in the modern age. People’s eating habits tend to be healthier. The natural and organic foods become the higher standard of their choice. McDonald’s not only needs to compete with their traditional competitors, such as Burger King and Wendy’s, but also McDonald’s should be aware of their new threats – fast-casual restaurants, such as Shake Shack. The fast-casual quickly seizes the market by providing high-quality food with “low enough” price. Therefore, the traditional quick-service industry including McDonald’s is facing the dilemma of performance declines. It seems that the appearance of the new competitor forces the traditional fast-food restaurants have to be healthy while better meeting consumer preferences. McDonald’s may sacrifice speed to catch up with their new competitors, which is one of McDonald’s core competencies.

McDonald is facing the issue that how to respond to competitive threats without losing the company’s core identity. In order to get through the identify crisis, McDonald’s should keep improving and intensifying the “fast and convenient” core competency to increase the loyalty of their old customers, while start to enter the “fresh and healthy” restaurants to attract the millennials and new customers.

“Fast and Convenient” is used to be one of McDonald’s core competencies. However, complaints about the speed of the service are increasing in recent years. The “Fast and Convenient” is losing the value to compete with other quick-service companies. McDonald’s tries to be on the right track to satisfy customers’ new needs, for example, the menu of fresh beef is now being implemented. But making the fresh beef costs more time than the industrial beef patty. At this point, it does not optimize the user experience but may lead to the loss of core consumer groups that are chasing to the speed of the food. In the other hand, McDonald’s wants win among the traditional competitors like Burger King. Thus, McDonald’s gives more options to their customer by proving “build your own” as a competitive response. As a result, it becomes a challenge to McDonald’s for the drive-through customers.

Another problem that makes McDonald’s lose the core competence is the bloated menu. Too many items waste too much times to produce, which causes the unsatisfied and complaints. Improve the food quality is the primary mission to McDonald’s. They do not need to excessive pursuit of the natural or healthy food with the current popular sale items. Because the exit of these items proves that there is still huge amount of people need and like the foods.

Cut the extra menu item is the second step that McDonald’s needs to be taken. Do not waste the time of the minority and lose the majority needs. Train the employees to be professional and friendly. Lastly, McDonald’s can also use the newest technology to improve the order-system and save the time. In a word, offering the simplified menu at low price, quickly serving the food with high quality, and no longer trying to imitate the new competitors who threaten McDonald’s. McDonald’s has to return to the original point and make itself to be the best “Fast and Convenient” quick-service restaurant.

Enter to the “Fresh and Healthy” For fast-food industry, it seems that health and speed cannot be both. It becomes a huge contradiction for traditional fast-food companies. The fast-causal restaurants are the new threats to fast-food restaurants. Fast-causal restaurants focus on the taste and image and distinguish itself from others from “Fresh and Healthy”. If McDonald’s wants to compete with the fast-causal restaurants, the most important thing is that McDonald’s cannot give up the “Fast and Convenient”, because McDonald’s has a huge customer base based on this core competency. In last section, it already points out how to intensify “Fast and Convenient”. As a direct response to the competitive threats, it is better for McDonald’s to open a new segment to address “Fresh and Healthy”. It is a way that helps McDonald’s does not lose the core identity. McDonald’s should convince the millennials or other target customers that McDonald’s can be not only an outperformance quick-service company, but also can be the leader in the fast-causal restaurants. By entering to the fast-causal restaurants, the differentiation strategy will be the best choice for McDonald’s. The supporters and visitors of the fast-causal restaurants are less sensitive to the price change. They have higher standards for the “Fresh and Healthy” and do not care how long they will wait to get the food. Therefore, McDonald’s should form a new product research and development team that devote to research the fresh, healthy, organic, natural items for McDonald’s to put into to the “Fresh and Healthy” segment. Most importantly, these items should be different to other fast-causal restaurants and looks pretty and attractive for the target customers who are chasing the health concept. The items in “Fresh and Healthy” segment will be limit and set at a higher price. The unique products aim to customers who values differentiated features more than the cost.

Lastly, the environment is another factor that determines if the millennials or the health support chose the product or not. Improve the environment and make it more fashion to fit the modern aesthetic can change McDonald’s proper image in the public. In conclusion, the recommendation for McDonald’s is that perfectly combine the “Fast and Convenient” and “Fresh and Healthy” by clear the extra items on the old menu and start a new segment with the fully menu with totally different limited items. It provides the double win for McDonald’s not only ensures the loyalty of the existing customers, but also attracts millennials who pursue new things. Some people may argue that this strategy is equivalent to disrupt McDonald’s supply chain and operation methods if open the new segment. Nevertheless, the combination is a way to build a bridge between McDonald’s and new customers, which can optimize the user experience. Overall, it is worth for McDonald’s to set up a trust and new relationship with the customers.