If you need a quick meal at a reasonable price, chances are that McDonald’s is going to be an option you consider. For instance, in the US, UK, and Brazil, Kantar BrandSnapshot finds over 7 in 10 people would consider eating at McDonald’s. And wherever you are, there’s a good chance that you’ll find a McDonald’s nearby. With over 40,000 stores, the global brand is the largest fast-food chain in the world.
For years, the combination of easy-to-mind and easy-to-find has helped McDonald’s hold its position in the Top 10 of Kantar BrandZ’s Most Valuable Global Brands Ranking. Recently, McDonald's has faced some challenges, including a dip in global sales and the impact of an E. coli incident in the US. However, the resilience of this iconic brand raises the question: What opportunities lie ahead for McDonald's to continue its growth story?
Traditionally, when people struggled to make ends meet, many traded down from fast-casual restaurants to fast-food chains like McDonald’s. However, rising house prices and rents, healthcare costs, and inflation have put a strain on lower-income households. As a result, the fast-food industry has suffered. In 2023, around 1 in 4 fast-food buyers in the US, Canada, and Australia reported that they were struggling to afford their meals. On a recent earnings call, McDonald’s CEO Chris Kempczinski acknowledged that price increases had led consumers to reconsider their buying habits.
To address the needs of value-conscious consumers, McDonald's introduced its $5 Meal Deal in late June. While the impact on sales hasn't yet fully met expectations, the brand is committed to adapting and refining its approach to regain momentum. Despite these headwinds, McDonald's long history of navigating market challenges gives it a solid foundation to turn these short-term obstacles into opportunities for growth and improvement.
So, what can McDonald’s do to continue moving forward? In the short term, the company has extended its $5 Meal Deal through the end of the year and is investing over $100 million to support its franchises impacted by the E. coli outbreak. While these steps are part of the solution, McDonald’s remains focused on building sustained momentum. Longer-term, McDonald’s has the opportunity to double down on the attributes that have made it successful in the past but reinterpret them to appeal to cash-strapped consumers.
BrandSnapshot offers us a perspective on the enduring strength of the McDonald’s brand and identifies which attributes can help propel it forward. Overall, McDonald’s remains a tremendously strong brand. It stands out as the most salient brand in many markets, readily coming to mind when people think of fast food. McDonald’s is also considered more meaningful than other brands, fitting well into everyday life for millions of people. Despite its ubiquity, the brand remains reasonably well-differentiated. This combination drives strong consumer demand and positions McDonald’s well for future growth opportunities.
How can McDonald’s supercharge its growth potential? The answer lies in its own Accelerating the Arches Growth Strategy, first introduced in 2020. This plan consists of three pillars: maximize marketing, commit to the core of burger, chicken, and coffee, and double down on the 4Ds of delivery, digital, drive-thru, and development. Together, these pillars form a cohesive plan to drive growth and win back consumers.
Looking in more detail, the “maximize marketing” pillar consists of two components: brand and affordability. McDonald’s has a strong brand, and there is significant potential for consumer-based growth. However, affordability remains a challenge in the current economic context. Meal Deals are an obvious mechanism to address price concerns, but affordability is not just a matter of absolute price. Consumers will pay a little bit extra if they believe that they are getting good value for their money. McDonald's needs to continue balancing perceived value with attractive pricing to reinforce consumer loyalty.
That brings us to the second pillar of “commit to the core”, which aims to ‘find new ways to bring our core menu to life’. To attract the value-conscious consumer, McDonald’s must find new ways to emphasize the quality, dependability, and enjoyability of its core offerings while tempting trial with new offerings and limited-time promotions. With the pandemic now largely in the rear-view mirror, the brand must ensure that that in-store dining delivers an experience that exceeds consumer expectations to drive loyalty.
McDonald’s is renowned in the industry for its creative advertising campaigns, and BrandSnapshot data highlights the brand's strong advertising appeal. The 2024 Christmas ad just released in the UK beautifully captures the feeling of satisfaction that a visit to McDonald’s can bring. Tired from Christmas shopping, a couple drives through streets lined with stunning Christmas decorations to the sound of Benny Benassi’s 'Satisfaction' to find their treat at McDonald’s. The ad is distinctive and heartwarming, and there is optimism that it will inspire many to visit the Golden Arches for a well-deserved break.
Even strong brands suffer temporary setbacks, particularly when social and economic circumstances change. However, strong brands like McDonald's are resilient and can quickly regain momentum with the right strategy and execution. Rather than a radical overhaul, the brand needs to find the right balance between pricing and value perceptions to ensure it remains the go-to place for a quick meal at a reasonable price.
Read more about the Kantar BrandZ Most Valuable Global Brands in the latest report, available at www.kantar.com/campaigns/brandz/global.
Kantar BrandSnapshot is a free interactive tool powered by BrandZ’s wealth of data and validated Meaningful Different and Salient framework. Designed to give you a complete picture of brand equity in competitive context, BrandSnapshot delivers insights on over 14,000 brands in 40+ markets. Super-size your brand strategy with BrandSnapshot on Kantar Marketplace today!
