Despite it all, McDonalds profits continue to soar

Tom Dougherty, CEO – Stealing Share

25 October 2010

Because the competition battles on table stakes

Despite bad press and the knowledge we all know that its food is extremely unhealthy for you, McDonald’s continues to thrive. Yes, Happy Meals last six months before it starts decomposing. Yes, the obesity problem in America, especially among our youth, can be partly attributed to McDonald’s. Yet, McDonalds profits increased by 10 percent (a whopping number considering its size in the fast food market) in the third quarter and its stock have surged.

How do you account for that? It’s an easy answer: McDonald’s has a brand. And brand trumps everything. It trumps bad press, an unhealthy reputation and a field full of competitors.

“My advice is to stop battling on price, marketing new products that come and go, and coming up with catchy and clever taglines that mean nothing to the market.”

And that’s because a meaningful brand is based on emotion, which drives human behavior, whether we care to admit it or not. You could, for example, explain all the ways the Droid is technically better than the iPhone (the rational reasons) and it won’t make a difference. The emotional drivers of the iPhone override all the rational reasons to buy.

mcdonalds profits

I bring this up because, lately, the mainstream press has asked me to comment on a handful of struggling fast food brands, such as Bojangles, KFC and Papa John’s. And they aren’t alone. Burger King, Wendy’s and Arby’s are falling faster and faster behind McDonalds as they continue failing to find that emotional brand that drives preference. Meanwhile, McDonalds profits soar.

My advice is to stop battling on price, marketing new products that come and go, and coming up with catchy and clever taglines that mean nothing to the market. Instead, they should uncover the emotional drivers in your target audience – and stick with it.

Uncovering those drivers is what we do at Stealing Share, and I have a feeling there are few industries that need our help more than those in the QSR category. That even includes the regional chains, like Burgerville, Dairy Queen and Church’s Chicken – and all the rest.

They are all seeing market share stolen by the market leader.

See more posts in the following related categories: McDonald's McDonalds profits QSR brands QSR market share


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