A Sriracha Big Mac won’t fix the problem

McDonald’s is testing a new menu option in central Ohio that is sure to raise some eyebrows as well as the temperature in some consumers’ mouths. McDonald’s is offering a spicy new Sriracha Big Mac and Sriracha dipping sauce for nuggets and fries.

Sriracha Big Mac
The Sriracha Big Mac is a desperate attempt.

McDonald’s says it is a way for its culinary team to fulfill the desire for the “next great innovation in food experience and taste.”

No offense McDonald’s, but I doubt your customers are coming for your next great innovation.

This is yet another example of McDonald’s not getting it. There are fewer McDonald’s fast food customers. Statistics show kids are eating fewer Happy Meals. Something like only 1 in 5 Millennials have ever eaten a Big Mac according to a recent internal memo. The fast food category sports so many better alternatives now. Thirty-second hamburgers and fries don’t seem to make a whole lot of sense to a lot of folks anymore.

The Sriracha Big Mac tactic doesn’t make much sense.

So McDonald’s wants to lure a new generation of consumers, most of which have never even eaten a Big Mac, to suddenly care about the Sriracha Big Mac?

The chain has sagging same store sales and consumers fleeing to the likes of Five Guys and Smashburger, Chic-Fil-A and the rest, who marvel at how stupid McDonald’s must be to think that a spicy Big Mac is the answer.

Let’s be totally honest, McDonalds is not going anywhere anytime soon. It will close some stores and sales will continue to be sluggish, but menu alone will not make or break McDonalds.

Menu is not a strategy, it is a tactic. Any menu changes must be part of a larger promise (the latest Madison Avenue advertising tagline is not it). Until it understands that and fully embrace the larger promise, the situation won’t change. McDonald’s will have more stories of sluggish sales and failed turnaround strategies.

The Chipotle brand needs help for customers to return

Woe is the Chipotle brand. Its third-quarter results showed net income plummeting nearly 95% versus last year and same store sales declining more than 20%. The food safety issues that plagued the chain last year continue to haunt it as once loyal customers are fearful of coming back.

Chipotle brand
The Chipotle brand is in need of serious repair.

Publicly, Chipotle continues to laud its industry leading food safety program and praising store efforts to create an excellent guest experience. Chipotle has also doubled its marketing efforts and is running its first television ads since 2012.

However, I don’t think Chipotle has fully grasped that its failure is not a business one but a brand one.

How the Chipotle brand can fix itself.

Prior to its very public food safety catastrophe, Chipotle was a Wall Street darling. It touted fresh and sustainable menu offerings, made to order for each customer. The Chipotle brand was so tightly tied with the freshness of its food that it was positioned as the anti-fast food establishment.

So what did it expect when people got sick from its food? Any connection that Chipotle made with the customer quickly vaporized. The expectation with food being fresh is that it is safer than at other places. Being non-processed gave consumers a certain security blanket.

Jump ahead a year later and consumers still feel like they were lied to.

The Chipotle brand is in serious need of repair. Shortly after the food safety incidents, it launched the before mentioned industry leading food safety program. If your brand is supposed to be about fresh and non-processed, why didn’t Chipotle have such a program in place already? The simple answer is that Chipotle never placed the bar high enough to fulfill its brand promise. Food safety to them was non-processed.

This is the rub. It is facing an almost insurmountable climb to get consumers to come back based on the laurels of its past. Chipotle appears to be simply telling consumers, “Come back to Chipotle, this time we mean it!” Customers are wisely not buying it.

As painful as it may be, Chipotle needs to revaluate its brand in an effort to reconnect to its lost customer base. They’re not just going to come back to the brand that has already failed them with a safety program. Consumers need an emotional reason to return.

Even McDonalds burgers are in trouble

McDonalds Burgers. If you follow this blog at all, you know that I have written about the fast food category quite a bit (and that Stealing Share has experience in this market). Most of the major fast food chains are losing market share, seeing weak and negative same-store growth and are consistently trying to out maneuver each other with new menu items. (Cheetos Chicken Fries from Burger King anyone?)

McDonalds burgers
Fewer people are eating McDonalds burgers

Recently, I read an article from the Wall Street Journal about McDonalds recent sales declines. This article was different from the litany of business articles about McDonalds struggles because it specifically looked at the its staple product – the burger.

Fewer people prefer McDonalds burgers

For a while now, McDonalds burgers have suffered from a number of quality issues, like dealing with the whole pink slime thing from a few years ago and the fact that burger chains like Five Guys and Smashburger are doing pretty well with better and fresher ingredients.

McDonalds has decided that now would be a good time to take a look at the quality of McDonalds burgers again.

At this point, however, this seems futile. McDonalds has already lost and I think its leaders know it too. Proof of this is in its current expansion of its all-day breakfast options. As wildly successful as McDonalds burgers has been, they are dinosaurs. McDonalds recent inability to adapt to the changing wants and needs of the consumer is proof of that. If McDonalds really wanted to compete (past tense) then it should have made a better Big Mac a long time ago, before its customers left the brand.

Now, even if it does come up with a better burger, it will still need to convince people that it is truly better. That process takes a lot of money and a lot of time. Unless McDonalds can fundamentally take a look at itself more harshly, there is not enough of either to fix what’s wrong with McDonalds burgers.

The Bayer Monsanto merger needs your attention

The world of crop protection, if you’re not aware, is both important and cutthroat. And it’s something of which we should all pay attention.

There are a handful of main competitors who are either constantly battling the EPA or fighting environmentalists along side the regulatory agency, depending on your bent.

Bayer Monsanto
Growing crops is about to get a whole lot more expensive.

It’s also a changing industry. The main players, such as Monsanto, Syngenta and Bayer, have long been under fire because their lead products were pesticides. Those chemicals raised the hackles of environmental groups and have spawned thousands (if not millions) of papers, editorials and books (started by Rachel Carson’s seminal book, Silent Spring.)

Today, however, those manufacturers are increasing their investment in seeds, which are genetically modified to increase crop growth and stave off infection from pests and disease.

That is why Bayer is offering $62 billion for Monsanto, the largest seed producer in the US, for a Bayer Monsanto merger I can see happening.

The pitfalls of the Bayer Monsanto merger to you.

There are positive and negative outcomes of this proposed merger, starting with the benefit the companies themselves would receive. The battlefield now is over combined resources, especially worldwide, to increase research and development, and also to enter into developing markets.

The power of the seed market is that the next worldwide shortage is promising to be food. The population of the Earth is increasing but the amount of farmland is not. The only way to meet the world’s future needs is to make crops more robust and stir up agricultural production in those developing countries.

Leaving aside the potential negative effect of genetically modified seeds, the effect on the farmer – and the US economy – is potentially deadly. Mergers are becoming the norm in crop protection, with Dow and DuPont joining forces last year and rumors of Chinese companies interested in Syngenta still circulating.

Mergers mean less competition and less competition means higher prices.

Keeping track of the mergers in crop protection is not usually top of mind for consumers but they are important developments to notice. Seeds are seen as a healthier alternative to pesticides, but more research to needs to be done.

But sticker shock will soon be coming to your nearby grocery store. In the US, we take for granted what is available and what food costs. However, a Bayer Monsanto merger will change all that. Prepare to spend more of your dollar at the grocery store.

Chipotle and food safety

First it was E.coli and now norovirus. With that, Chipotle, the once darling of Wall Street and consumers looking for a healthier fast food option, has a serious brand problem.

Earlier this year, more than 50 customers in nine states became ill with E.coli after eating at Chipotle. Yesterday, 80 students from Boston College became ill with norovirus after eating at a local Chipotle.

This is a huge problem for a brand that has built itself on sourcing and serving the best ingredients available.

Chipotle
The outbreak at Chipotle is even worse considering what its brand means.

To be fair, Chipotle is not alone in having to deal with food-borne illnesses. McDonalds had an outbreak of E.coli in 2014 due to suspected undercooked hamburgers. In 2006, Taco Bell had a E.coli outbreak due to some tainted lettuce.

But neither McDonalds or Taco Bell claim to be in the business of “…finding the very best ingredients we can—with respect for animals, farmers, and the environment…” You see, Chipotle’s point of differentiation – best ingredients – is exactly why this is a much larger problem for Chipotle than any of its competitors. Failing on food safety is the antithesis of what the Chipotle brand is supposed to be about.

What Chipotle is saying.

Yesterday, at the Bernstein Consumer Summit, Chipotle CEO Steve Ells told investors, “We have the desire to be the safest place to eat.” Think about that statement in terms of the Chipotle brand. Shouldn’t being the safest place to eat have been part of finding the very best ingredients? It is akin to an airline saying, “We have the desire to have the fewest plane crashes.” It is a table stake. It is part of what every restaurant has to do. Food safety should be a given.

For a company whose brand is about the quality of its food to now say that, after E.coli and norovirus outbreaks, that they “have the desire to be the safest place to eat” is almost comical. It should never have been an issue.

The best brands have a sense of forethought. Meaning, because of what the brand stands for, the brand should be a guide for what the business should plan for, now and into the future. Take a brand like Servpro whose brand promise is to return things the way they were before, like the event never happened. From a business perspective, what does that mean? It means that Servpro must have all of the right tools, processes and methods to respond to any kind of disaster. It also means that the tools, processes and methods it uses don’t make things worse or hurt anyone.

The outbreaks and Chipotle’s response to them illustrate that Chipotle has not completely used the power of its brand appropriately. It either has lacked conviction or complete understanding of what its brand promise should mean to its business and now its brand may be in serious trouble.