McDonald's Mighty Wings Problem: What is Going On at HQ?
The restaurant business is dynamic and ever changeable. You can never tell what consumers will do.
But the depth of the recent Might Wings product problem at McDonald's is surprising. That chain invented chain restaurant systems and processes in the 1950s and 1960s. With McDonald's sheer number of test market routines, consumer research, marketing councils, highly paid ad agencies, new product development staff, daily product mix polling, supply chain staff, sophisticated contracting tools and contract bargaining ability that just about every vendor would want to be part of, ten million pounds or 20 percent of Mighty Wings product overstock is way too much.
Bloomberg notes that McDonald's will now simply discount the product. It notes that the spiciness of the Mighty Wings should have been talked about and worked out earlier before its original launch. Yes. But in an 89% (US) franchised company-- it is franchisees who pay in the end. The fix isn't as easy as the words given to the media indicate.
Wings discount eats into zee profits
A surplus of Mighty Wings may have to be discounted in order to be sold, which in turn eats into McDonald's zees' profits. Adage reports this:
"The question is, what's more precious, advertising dollars needed to grow sales or the wings McDonald's has on inventory?" said Richard Adams, a former McDonald's franchisee and current franchise consultant. "McDonald's corporate develops the product and tells the suppliers how much to produce -- it's all on them. Franchisees appear to be saying, 'If you like your Mighty Wings, you can keep your Mighty Wings.'"
This is the kind of thing that happens when the franchisor has total and arbitrary control of their franchisees.
Gloom & Doom is Back With Wings
Leaders lead and McDonald's must continue to push the envelope or they will end up like a Darden concept.. The easiest armchair consulting quarterbacking is jumping on the bandwagon of those who tell you of a miss step. Looking back is not so hard from a rocking chair.
Give McDonald's credit for extending it's menu product categories.
McDonald's losing its mojo is big news
Yes, but you miss the point. McDonald's has been a leader of the pack but it has made stumble after stumble in a race that would have been easy for it in the past. The Wings thing is the latest sign of many that McDonald's has been losing its mojo.
That's a big thing. McDonald's isn't supposed to be Wendy's or Burger King.
Very Few Big Mac's
No one missed the point but the author. There is only one Big Mac after 30+years. Few LTO's provide long term lift. The previous visitor was right. Leading means pushing the menu limits, which is at times more important than doing nothing or copying others like Burger King or Wendy's.
Big Mac Writer Misses the Point
This McDonalds issue is not about Big Macs (yes, Burger King and Carl's have copied the Big Mac). It's about an industry leader that isn't leading and managing the new product process properly.
Restaurants must innovate and test, but the point of testing is to learn and fix issues before they debut nationally.
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Franchisees suffer losses
When senior management of a publicly traded franchisor - or any franchisor - is pressured to innovate to outperform the market, Franchisees typically suffer. It happens to too many systems far too often.
As long as senior management is seen to be attempting innovative ways to increase sales/profits, shareholders will continue to reward management with potential bonuses or security. If failed innovation results in losses for Franchisees only, management will continue to try "everything and anything" to increase corporate sales/profits (understanding that sometimes increased sales from innovation leads to decreased profits for Franchisees).
Senior management of a franchisor could engage Franchisees to work together on finding mutually beneficial solutions, but because of self-interest, that tends not to happen. This is another example of why Franchisees in any system should consider pre-emptive discussions and action to advocate for their interests.