Anthony Curtis’ Post

Chipotle Thrives While McDonald's Struggles: It’s not the price. It’s the strategy. Many marketers are quick to blame price and inflation when their business slows down. And then they drop the price. That is lazy marketing. When one analyzes the driver and inhibitors. With marketing discipline, a truth usually emerges: It’s not about price, it’s about perceived value Competing on price is a race to the bottom. Price cuts are not the solution. Consumers pay a premium for perceived value. Always. This article from the economist (might be paywalled) prompted these thoughts. 1. Chipotle's Success Despite Higher Prices and Criticism: Chipotle Mexican Grill's sales grew by 18% from April to June 2024, despite higher menu prices and criticism over portion sizes, with demand increasing across all income groups. 2. McDonald's Struggles with Low-Income Customers: McDonald's sales fell by 1% in the same period, as its low-income customer base felt the economic pinch, even with the introduction of a $5 meal deal. 3. Mixed Economic Signals and Consumer Behavior: The contrasting performances of Chipotle and McDonald's highlight that perceived value is critical and price cuts aren't always the best strategy. Consumers are more selective, often seeking value for money rather than just lower prices. What do you think? Is competing on price a good idea to overcome economic adversity? Or is it better to relook at the marketing mix and enhance the consumer’s perceived value? McDonald's Chipotle Mexican Grill #marketing #branding #management #mentoring

Good insights

Despite rising prices, business remains good at Chipotle. For me, a lunch or dinner for two approaches $25.00. It could be less, if we forgo the outrageously priced guacamole but it's rare that we do! Customer loyalty in the fast casual food business (Chipotle created this market by the way) is critical and CMG nails it with many customers eating at its stores multiple times a week. In recent memory, the chain faced the PR nightmare of any restaurant: people got sick from their food. The stock nearly halved in price and leadership dug deep to fix the causes and over time customers came back. When things go wrong, it's best to own it like Chipotle did, commit to changes and realistically set expectations to key stakeholders (customers, shareholders, regulators and employees). Instead of rushing to get back on track, some menu items were not offered until the company was confident it could do so with the greatest of confidence of safety. It's a lesson to be learned for many leaders. With new menu items, loyal customers, and the crisis squarely in it's rear view mirror, the black or pinto bean counters at the company are happy as are shareholders.

🍽️ Americans are spending more on food and beverages outside their homes than ever before. Whether it’s coffee, chicken sandwiches, or protein bowls, U.S. consumers spent a record $95 billion on food and drinks in July alone, according to the U.S. Census Bureau. That’s a 40% increase since the pandemic began! 😲 🔺 What’s driving the spike? 25% of this increase comes from rising costs (as reflected in the Consumer Price Index for food away from home). 15% is due to increased consumer demand, despite higher prices. Consumers still view quick-service restaurants (QSRs) as a source of value and convenience, even with rising menu costs. Mobile ordering and food delivery apps have only fueled this trend further, bringing the check-out line straight to the couch. 📈 The impact? QSRs continue to dominate. Starbucks alone opened 473 new locations in 2023, while Jersey Mike's added 287 stores. This restaurant growth is driving retail leasing activity, with food and beverage spots accounting for nearly 20% of all retail leases last year. 📉 Not all brands are thriving, though: Subway has closed nearly 2,000 stores over the past three years, showing that not every chain can keep up with changing consumer preferences. As we move forward, it will be fascinating to see how innovation, convenience, and consumer demand continue to shape the food and beverage landscape. How are rising costs or consumer preferences impacting your business?

Americans are revolting against McDonald’s and fast-food chains. That’s hurting french fry suppliers like Lamb Weston. Lamb Weston, the largest french fry producer in North America and a major supplier to fast-food chains, restaurants and grocery stores, is closing a production plant in Washington state and laying off nearly 400 employees, or 4% of its workforce. Restaurant prices have increased faster than grocery store prices in recent years, leading customers to pull back at fast-food chains. Around 80% of french fries consumed in the US come from fast-food chains, Lamb Weston said. Lamb Weston said customers at fast-food chains dropped 2% last quarter and 3% the previous quarter compared with last year. French fry consumers have also reduced the size of their orders from large to medium or to small to save money and seek value in special meal offers. https://lnkd.in/grMrygDx

How have fast food chains been responding to inflation? A price war is emerging in the fast-food industry as McDonald's and Burger King introduce $5 value meal promotions to attract inflation-weary consumers, with Burger King aiming to launch before McDonald's June 25 start date. Wendy's also announced a $3 breakfast deal. These moves respond to inflationary pressures affecting customers' spending habits. While companies like Target and Walmart are lowering prices to attract budget-conscious shoppers, some fast-casual restaurants like Chipotle and Sweetgreen are not cutting prices, as their higher-income customers are less affected by inflation. Fast-food chains and fast-casual chains have to decided to adjust their strategy by focusing more on the customers' perceived value. #inflation #fastfood

They're not lovin' it. Despite launching $5 value meals to lure customers back, McDonald’s is grimacing as its sales last quarter sputtered. Customers are cutting back, and Mickey D's may be the Early Birdie of what's to come for restaurants. The Golden Arches are losing a bit of their shine these days. While McDonald's are betting on value meals, the chain will likely need to come up with other solutions to get customers to spend. And Ronald isn't alone. Facing mounting economic pressures, consumers are reducing spending on food away from home, leading to decreased foot traffic and lower overall sales for major chains like Starbucks, Burger King, and Wendy's. Worse for Ronald and crew is the pullback isn't just here in the U.S. but globally. The Grandma McFlurry won't be enough. Rising fast food prices have in the eyes of some customers turned them into a luxury, and that's a significant issue when they have plenty of options available to them both dining out and through food delivery services. For McDonald's, the chain is also looking at new menu items, but those take time to build awareness and interest. The next few quarters will be interesting, not only for McDonald's, but for the entire restaurant industry. While inflation is cooling off, that doesn't necessarily mean groceries are. Left with difficult choices, consumers will likely cut back on dining out or buying other food away from home https://lnkd.in/efSwnCHc #mcdonalds #restaurants #fastfood #inflaton #consumers #economy

When the battle for the American consumer’s wallet plays out between a $10.60 Chipotle bowl and a $5 McDonald’s meal, the real question isn’t about price—it’s about value. In a world where inflation is squeezing budgets, why is Chipotle thriving while McDonald’s struggles? The answer offers critical insights into today’s market dynamics, challenging the assumption that cutting prices is the only path to success. Here’s why thinking creatively, not just cheaply, might be the ultimate competitive edge. #BusinessStrategy #ConsumerTrends #MarketInsights

According to The Wall Street Journal, McDonald’s reported a nearly 1% decline in U.S. same-store sales for the June quarter, the first since 2020. Consumers are opting to dine at home due to cheaper grocery prices, impacting sales globally. Despite challenges, McDonald’s maintains its guidance for new stores and operating margins. Their $5 meal bundle is a hit, especially with lower-income customers. As American brands face competition from domestic rivals in China, McDonald’s focuses on affordability and value. How do you think the restaurant industry will navigate these challenges? Share your thoughts below! #RestaurantIndustry #ConsumerBehavior #EconomicTrends #BusinessInsights https://lnkd.in/ec-2tWg5