2012: McDonald’s, Brand Revitalisation - Case Study

2012: McDonald’s, Brand Revitalisation - Case Study

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Learning to love the brand again

How a massive overhaul of every part of the UK business won the brand renewed public affection and led to record-beating sales.

Key insights

  • McDonald’s embarked on an ambitious revitalisation of the brand following a series of events that had damaged brand perception to improve every aspect of the business.
  • Based on substantial investments in research, food was revamped and reinvented, restaurants redesigned and staff morale boosted.
  • The result: the UK had its best-ever year of sales growth in 2008 since it first opened its doors in South London in 1974.

Summary

McDonald’s is the leading global food service retailer, with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day. More than 75% of McDonald’s restaurants worldwide are owned and operated by independent local men and women. In the UK McDonald’s faced the challenge of revitalising the brand and the business. It needed to re-connect with its customers, bolstering their trust in the brand and engaging with them on a new level in communications. It recognised that key to achieving this would be a renewed commitment to listening to and understanding its customers, and being open and transparent as a business.

It was a big challenge. In 2005 McDonald’s business performance and brand perceptions had reached a plateau. A combination of factors in the brand’s recent history had undermined consumer trust. It seemed that the nation’s love affair with McDonald’s might be over. In response, it re-focused around a clear vision and ambitiously overhauled just about every aspect of the business and the way it presented itself.

By being customer-led over the next three years McDonald’s UK made record levels of investment in upgrading the experience for customers in the areas that mattered most to them. This included improving the fundamentals of the business: the food, the restaurants and communications. The business flourished, with eleven consecutive quarters of growth, and its best ever year of sales growth in 2008 since it first opened its doors in south London in 1974.

Taking stock

In 2005 McDonald’s business performance and brand perceptions had reached a plateau. A combination of factors in the brand’s recent history such as the Mclibel trial, Eric Schlosser’s book Fast Food Nation, general disquiet about obesity and fast food and the film ‘Supersize Me’ had undermined consumer trust. It seemed that the nation’s love affair with McDonald’s might be over.

So the brand had to win back its place in customers’ affections by overhauling just about every aspect of the business that could affect its relationship with them, and finding the right way to express itself in communications.

A fresh start

The process of change really started with the appointment of Steve Easterbrook as chief executive in early 2006. He made several new senior appointments, blending fresh thinking with internal promotions to usher in a culture of change.

The business went through a period of rigorous self and customer analysis. Much of the insight boiled down to a simple truth: although lots of consumers still went to McDonald’s, they didn’t feel as good about it. The brand had to get back to the basics of what had made it so appealing in the first place and re-ignite the passion it had attracted from customers.

Crucial to this would be the definition of a clear vision as the basis for the new brand story. This was defined as the ‘progressive burger company’:

  • Progressive: signifying the commitment to change.
  • Burger: because that was the true heart of the brand.
  • Company: because McDonald’s behaviour as an organisation is important to customers, employees and stakeholders and is the key driver of trust.

This was to become the focus for the business and the brand: addressing core customer concerns to rebuild trust in the brand. This meant acting to fix the fundamentals of the business: the food, the restaurants and how the brand presented itself in communications.

To achieve this, the business was determined to achieve a new depth and breadth of consumer insights to inform and inspire its decision-making. Qualitative projects such as co-creation weekends, spent with groups of consumers, employees and franchisees to help unlock insights into how to build a better McDonald’s, and ethnographic research were complemented by a 4,000 sample usage and attitude study and continued use of the brand’s established quantitative tracking tools.

Becoming customer-led in every area of the business

Over the next three years McDonald’s UK made record levels of investment to upgrade the experience for customers in the areas that mattered most to them: the food for both adults and children and the restaurants.

1. The food

Improving food perceptions was clearly absolutely critical to re-appraisal of the brand.

A grown-up menu for adults

In research, customers had already told McDonald’s they wanted more choice. In response, the brand had initiated a programme that made more changes to its menu in three years than it had done in the previous thirty. Innovations across the menu saw the introduction of products such as new chicken recipes, using only 100% chicken breast meat from approved poultry farms.

Now even more choice was added. Bagels and porridge were launched at breakfast and fat, salt and sugar content were reduced. Organic milk and Rainforest Alliance coffee were introduced and a 10-year programme for free-range eggs culminated in their exclusive use throughout the menu.

It was also vital to ensure that customers were provided with options that matched their tastes and wallets. More premium food was launched, both beef (e.g. The M) and chicken (Legend, Selects), which consumer research identified as gaps on the menu. The aim was to offer better products to build better impressions with the public. To give an indication of the scale of the success of some of these recipes, McDonald’s UK sold 21 million Chicken Legends in 2008.

Healthier Happy Meals for children

Parents wanted the Happy Meal to remain a treat for their kids — still to include a toy, for example — but were concerned about nutrition. Changes had already been made in 2004, adding choice with fruit bags and carrot sticks, but new moves included adding fibre to buns, serving fries unsalted if parents preferred and introducing semi-skimmed organic milk and fresh orange juice. In addition, the salt, fat and sugar content was managed to ensure that nearly 80% of Happy Meal combinations were not high in fat, salt and sugar as defined by the Food Standards Agency.

Parents also said they wanted help getting their kids to eat more fruit and vegetables, so the advertising approach was evolved to use licensed properties such as Kung Fu Panda to promote the 5-a-day items in a Happy Meal. Today McDonald’s is one of the biggest providers of cut fruit to children in the UK. This led to the share of family visits growing vs the market: in 2008, for example, 80% of families visited McDonald’s.

2. Makeover for the restaurants

Research showed that customers saw room for improvement in some aspects of the McDonald’s experience, so these were addressed with a series of investments.

An inviting new look

The single most visible signal of change to consumers was the store re-imaging programme, which began in 2006 and which completely changed the look and feel of the outlets. Out went the 1980s hangover combination of bright red, yellow and plastic. In came softer greens, purples and wood, more modern and contemporary furniture, materials and seating configurations. McDonald’s became as cool a place to hang out as any coffee shop.

By the end of 2008 80% of the high street restaurants had been refurbished, with consumer research showing increased consumer commitment to the brand and rising sales.

Encouraging a new attitude
The business made a significant structural change by increasing the number of franchisees. Entrusting more restaurants to local entrepreneurs was a huge success, based on the simple premise that if it is your own business you tend to run a better restaurant. At the same time, focus on improving operating standards led to cleaner, more efficient and friendlier restaurants, while investment in new kitchen equipment enabled the serving of fresher, hotter food. This was complemented by improved communication to stores. The result was distinctly improved customer satisfaction scores. In addition, extended opening hours to reflect changing lifestyles saw more stores trade for 24 hours at least once a week.

A series of innovative ideas

Other initiatives offered evidence of the brand’s progressive ethos.

  • McDonald’s was the first restaurant chain to launch ethical coffee onto the High Street with Rainforest Alliance coffee, lattes and cappuccinos at sensible prices. In 2008 McDonald’s sold 10 million more cups of coffee than in 2007.
  • It started using bio-diesel made from its own used cooking oil to power the lorries that deliver to restaurants.
  • It became the first chain to introduce free wi-fi across the UK — a move that provided customers with a reason to visit more often.

Rebuilding trust in the brand through communications

These physical changes to the business needed to be matched and amplified by communications that engaged people on a different level, which meant that the brand needed to change its conversation with consumers to regain their confidence. Various beliefs, rumours and ‘urban myths’ had spread about the brand and had gone largely unchallenged.

These were now attacked head-on, demonstrating a new transparency and determination to set the record straight.

The brand challenged the public to make its own mind up about McDonald’s, launching a website called ‘Make up your own mind’, which invited people to ask any questions they wanted and have them answered honestly. In addition, Steve Easterbrook went head to head with Eric Schlosser, author of Fast Food Nation, on Newsnight in May 2006.

This was a big gamble, but it paid off. People saw a different side to McDonald’s. And it was highly symbolic internally, giving the confidence boost necessary to drive genuine brand revitalisation. The company now regularly meets with government bodies and non-governmental organisations (NGOs) to provide them with the facts about its food and is a willing participant in debates.

McDonald’s also became the first restaurant chain to introduce nutritional labelling onto packaging to help people make the right choices for themselves. Internally, several initiatives aimed at upgrading the employee experience were introduced, including the McJob campaign, new crew uniforms and the apprenticeship programme.

These changes were shared with the media in an open and honest manner, which continued to challenge media expectations and force reappraisal. The ratio of positive to negative brand messages improved dramatically. For example, during the third quarter of 2008 68% of messages were positive, compared to only 9% negative, with 23% neutral — a remarkable indication of how far the brand had progressed.

Engaging with advertising

McDonald’s had always been committed to using advertising to drive its business, but now was the right time to take the opportunity to use it more pro-actively to manage its brand image and perceptions. The intention was to signal to consumers and stakeholders that the company was talking to them in a new and engaging way to celebrate the truths about, and show pride in, the brand.

A prime opportunity for doing this was the Happy Meal, where the changes in the product offered the ideal platform for re-connection with mothers’ heads and hearts, through a combination of emotional storytelling and rational reassurance to shift attitudes and make a statement.

This led to the ‘That’s What Makes McDonald’s’ campaign, in which the ‘Planting’ TV commercial told, charmingly and engagingly, the truth about the core ingredients of a Happy Meal, celebrating the food and connecting it back to its source (Figure 1). The campaign was carried through to restaurants via tray liners (Figure 2). And it was used as a key internal communications tool, signifying the brand’s new direction and attitude.

Tracking showed that the campaign was the brand’s most successful TV campaign this century, and there were strong signs of positively influencing brand perceptions (and not just among the mothers at whom it was primarily aimed). By the end of 2008 not only had the key messages the brand wanted to communicate been picked up by ‘Happy Meal’ mums and the general audience of young adults, but the campaign had gone a long way to restore its relationship with the British public. ‘Planting’ had made them feel better about McDonald’s (Figure 3).

In the broader advertising context, it is worth noting that as part of improving communications effectiveness McDonald’s conducted a thorough econometric study which helped refine media selection, leading to a 29% improvement in advertising return on investment (ROI) since 2005.

Savouring success

From mid/late 2006, the business saw a marked improvement in sales, ‘guest counts’ and market share. Customer perceptions of the brand also improved significantly, especially on the ‘trust’ measure which represented a key objective for
the brand.

1. Business performance

By the end of 2008 McDonald’s in the UK had seen 11 consecutive quarters of growth. For the full year 2008 European sales grew by 8.5%. McDonald’s does not publicly disclose sales data by individual market. However, to give an indication of the scale of revitalisation, the UK had its best ever year of sales growth in 2008 since it first opened its doors in South London in 1974.

Market share also grew despite operating in what is recognised as one of the most competitive eating out markets in the world. In the ‘informal eating out’ sector, McDonald’s enjoyed four consecutive quarters of increasing share of market from the last quarter of 2007, outstripping the growth that the sector itself was showing over the same period.

2. Consumer perceptions

Changing perceptions of an established brand is notoriously difficult. However, by the end of 2008, significant improvements had been made in all but one of the 30+ brand metrics that were continuously tracked.

First and foremost, McDonald’s revitalisation was achieved by listening to its customers and, as a result, making record levels of investment in the things that matter most to both customers and employees. The restaurant experience was significantly upgraded, openness and transparency had become fundamental to the way the company does business and marketing activities were achieving new levels of effectiveness and relevance.

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Author: The Marketing Society
Posted: 13 Nov 2012
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