Fast food chains Domino’s and McDonald’s could have lessons for other retailers
How do you get stuff to people? This seemingly straightforward question poses a dilemma that continues to bamboozle retail executives throughout the world.
While many of us are fascinated by products of the future – driverless cars, 3D printers, the internet of things – an equally significant challenge lies in how to bring today’s goods to market.
Traditional areas of business, such as pizza-selling or the local groceries sector, still contain opportunities for the quick-witted and pitfalls for any executives who fail to move with the times.
Contrast Domino’s, which has doubled its share price in the past 18 months, with a supermarket like Morrison’s. The former’s astonishing success is not down to a radically altered product, but rather the swift and efficient way it has adapted to customer habits and convinced people to order a 12-inch American Hot by tapping a few times on their smartphones.
Morrison’s, meanwhile – which has seen its stock fall from over 300p a share in 2013 to 160p last night – adapted late to the growing demand for small, local convenience stores, and ended up buying (and now selling) a load of abandoned Blockbusters. The difference between good and bad decisions equates to billions of pounds in sales and market cap.
McDonald’s boss Steve Easterbrook, the boy-done-good from Watford, understands the importance of delivery and took the gamble this year to trial and then quickly introduce all-day breakfasts in the US.
What seemed like a very simple request – let people buy a McMuffin at 5pm if that’s what they want – went down badly with franchises, which complained about changes to their production lines, and customers turning away from more expensive non-breakfast items.
But last night Easterbrook insisted that the start has been “encouraging”, and indeed “a little better” than expected.
A survey by a Nomura analyst reckons McDonald’s could see a 1.5 per cent jump in sales this quarter from all-day breakfasts alone.
Shares have hit record highs since the Brit took over and convinced investors that he can boost sales with a decisive turnaround plan. The signs so far are good, and before long we’ll have a clearer idea of whether or not the all-day breakfast was worth the fight. As ever, the proof is in the pudding.