Last week, McDonald’s announced they are adding a new line of premium burgers to their menu. The business that for seventy-five years has hung its hat on inexpensive, consistent, mass-produced burgers wants to (try again to) beat Five Guys at their own game. I’m skeptical.
Every business goes through rough patches. And there’s no better way to get stuck in them than lying to yourself about who you really are.
On a Sunday morning in September 2008, I was with the other managers of our newspaper company in the office. The financial crisis had accelerated significantly that week, and we wanted to determine the impact on our business, and what kinds of changes were needed. We were unanimous in our assessment: everything will be just fine.
That business was cyclical: we would lose money through the summer, and then rebound in the fall, winter and spring to net a profit for the year. When we met in September, we’d come off three months of losses, but nothing outside of the norm. We told ourselves: things will rebound, as they always did, and we would be fine.
The truth was ugly and difficult, so we ignored it. Less than three weeks later we were back in the same room, and this time we had no choice but accept reality. Management was pulled from payroll. We immediately laid off almost a third of the company. Everyone else received pay cuts. We cut circulation, and eliminated every non-essential expense from the business.
McDonald’s knows what they need to do to be successful. Ensure consistent quality. Add stores for convenience. Innovate new menu items in the right price point that appeal to their customers (the Big Mac, Filet-o-Fish, McRib, and others are great examples). They even saw the potential in the same market they’re trying to re-enter now years ago when they bought a big stake in Chipotle.
In 2010, the CEO of McDonald’s outlined what it takes for food to make it on the menu: “[McDonald's doesn't] put something on the menu until it can be produced at the speed of McDonald's.”
Five Guys, and fancy sirloin burgers, don’t move at the speed of McDonald’s. I’m sure McDonald’s would love to sell premium burgers, but that’s not who they are. And I don’t think this item is any more likely to return growth to the business than the last premium burger experiments they’ve conducted.
It’s time for McDonald’s, and all of us, to be honest about our businesses.
2009 was an awful year. Our company cut products. We implemented weekly Sunday morning meetings where management gathered to manage cash for the coming week. It was miserable. But it forced us to examine what the key things were that we did well, and draw on those strengths to keep the business alive. Ironically, we exited the financial crisis the strongest we’d ever been. We were focused, honest with ourselves, and executed the small number of things we knew we could do exceptionally well; 2010 was the best year we ever had.
Every business wants to innovative, game changing, or any other number of ridiculous attributes they self-apply to feel exceptional. The fact is that being honest about who you are, what you do well, and why you do it is more essential to growth than innovation or anything else. The strongest companies in the world aren’t all innovative, but they’re honest about what they do well and focus on executing it.
It’s time to start telling yourself the truth about your own business