A Wider Net

McDonalds is revamping their in-store experience with a $1B overhaul to create a Starbucks-like eating experience. As Jim Carra, Senior Vice President of Domestic Restaurant Development states “McDonald’s has to change with the times” sparking a re-vitalization of the 14,000 eateries by 2015.

But will changing the in-store experience help reshape customers’ expectations about McDonalds? What alterations (if any) will it have on brand perception? Here are some thoughts that may contribute to the success (or failure) of the changes:

• The Value of Nostalgia: Reading about these changes, I recalled the memories of my experiences at McDonalds as a child: spinning in the yellow plastic chairs while I ate my fries, wondering if the large plastic Ronald in the store was actually watching me and hearing my mom’s long-winded explanation about waiting 20 minutes for my food to digest while my friends hit the playground.  For an established brand like McDonalds, nostalgia can’t be overlooked when re-vamping a customer experience. It is the accumulation of these past experiences — whether positive or negative — that define our perceptions of a brand. Perhaps we as consumers have become less nostalgic to brands due to the constant and rapid changes to product-lines and services (online versus brick and mortar). But in the case of McDonalds, it’s brand longevity and influence on American culture that makes the change harder to swallow. And for those consumers who grew up on the retro McDonalds of past years, their nostalgia can be a trigger for purchasing decisions for their current families.
• Drive Thru Nation: In 2011 alone, the fast food industry will do $168 billon dollars in sales of which 70% will be through the drive thru. QSRs (Quick Service Restaurants) have invested hundreds of millions of dollars in streamlining their drive thru operations to ensure customers receive their food in record time. As competitors like Burger King and Taco Bell focus on upgrading their kitchens and production lines to get food to their drive thru customers, are McDonalds’ in-store efforts going to reap any rewards?
• It’s about the Food (and the Prizes): Part of McDonalds push to change their in-store experience has been based on their desire to compete with Starbucks. And they already made a dent in the coffee wars with their McCafe line helping to boost their stocks 125% in the past five years. But McDonalds product offerings are far different from Starbucks:  you can’t get a Happy Meal and McRib while ordering a Venti Chai Latte at Starbucks. In looking at the overall customer experience, McDonalds should also be looking at how their menu should align with the new in-store experience. The key word here is cohesion: each facet should work together to build a positive and rewarding customer experience. McDonalds is known as a kid-friendly, family establishment which has been built around their menu of burgers, fries and prizes. As our Group Creative Director Loriann Murray stated “emulating another brand that doesn’t have the same core values doesn’t make a lot of sense.”

In the end, we at Cramer hope McDonalds’ in-store investment pays off. But we are spilt on whether the change will be enough to make customers want to actually spend time eating a meal there.

However there is one thing that McDonalds should consider: Grimace is in need of an extreme makeover.

Update 5/19/2011: Interesting turn of events happening over at McDonalds. Seems some doctors want to ‘retire’ Ronald McDonald: http://www.msnbc.msn.com/id/43095219/ns/business-retail/. Guess the CEO at McDonalds wasn’t down with it.