

Why Pizza failed at McDonalds - karjaluoto
http://www.speakhuman.com/ch09_Focus_and_Differentiation

======
blantonl
I worked at McDonalds as a teenager and in college. Our store owner seemed to
be enjoy being a test-bed for new products or concepts that actually made it
out of the labs.

Some things our store did while I was there:

* Fried Chicken. Yup, McDonalds fried chicken. We installed this huge vat in the back of the store and boxed up greasy fried chicken. And it sold pretty well.

* Home delivery. I'm not kidding, we actually implemented a home delivery concept where the customer would call in an order to some call center, and out popped an order on a special printer in the store. Someone would box up the order, and drive it over to the customers house. It was a pain in the butt from a resource scheduling perspective, but a wonderful thing for the hamburger-flippers (tips, and 15 minutes away from the store in the car)

~~~
tptacek
When you look at it through the lens of McDonalds having tens of thousands of
testbeds to expiriment with, the conclusion you draw might be _exactly the
opposite_ of the one the article makes. It's not that McDonalds should stick
to its knitting. It's that they have billions of dollars and one of the 5 best
retail infrastructures in the world to develop and test concepts with.

 _Of course_ they're going to try lots of things that don't work out. That
doesn't mean "stick with the burgers"; it means, "stick with the things that
are scalable and compatible with McDonalds". Pizza happens not to be one of
them. Coffee, on the other hand? Appears to have made it out of the testbed.

~~~
crux
I agree. Marketing anecdotes are always fun to read, but it seems like nearly
every marketing expert that comes through these pages is suffering from a
serious case of post hoc, ergo propter hoc with a side effect of confirmation
bias. The nature of business competition is such that this author, or Malcom
Gladwell, or whoever happens to be trying to find a thread of causality that
they can build a strategy out of, is nearly always going to be able to find a
dozen examples that bear out a given strategy, and a dozen that clearly argue
for its opposite. But 'differentiate yourself early with a product that fits
the needs of the market and low overhead, grow steadily, and once you become
big enough to sustain multiple operations, devote some resources to
experimentation in order to keep your brand vital without diluting your core
message; also, make friends with governmental agencies' doesn't roll off the
tongue, and doesn't seem to the be cutting insight we're looking for.

The only one-sentence business strategy I've heard of seems to be 'Work hard,
even if you don't see any immediate payoff, and get a little lucky.'

Of course then again the fact is that most business authors are not as good as
the people actually working at MacDonalds and their ilk. The author sees the
way things are and can only conclude it's because they're following a natural
and immutable law: MacDonald's pizza failed because it didn't conform to their
natural state. But as you point out, Coffee (and biscuits) are just as
unnatural if you assume that your 'one thing' is what you are right now, which
is a burger stand. The reason that nearly all businesses succeed is because
they have been shrewd—or lucky—enough to decide on their own form. Paring down
to your core competency—which is tacitly assumed to be the thing you're best
at RIGHT NOW—is sometimes a part of this process, as is experimenting with new
shapes, as is finding previously-undetected connections between the two.

~~~
karjaluoto
I'd love for you to read the rest of the book (several chapters are already
online for free). I'd be interested in seeing how you feel about it after
doing so.

We've worked with a number of small organizations in helping them find their
stories and tell them. Largely, what we've come back to is similar to what
you're stating here: there are very few immutable rules. You just have to
figure out what you're doing, try things out, and make the best choices you
can.

The challenge for the marketer (or writer in this case) is to try to find
patterns and distill meaning from them. The truth is, marketing--and business
success--is hard to pin down, or repeat. Nevertheless, owners of small
companies often seem to think (erroneously) that the big guys have it all
worked out, and that it's easy for them.

What I worked to do with this book, was outline a set of good, solid
suggestions, peppered with anecdotes relating to those who seem to have been
successful, as well as those efforts that haven't. It's imperfect, but I
believe there are useful suggestions in there; it's up to the reader to
determine what might work for them.

For the record, I like the strategy: "Work hard, even if you don't see any
immediate payoff, and get a little lucky." The tough part is that there are a
number of other questions that such a suggestion won't help answer. At those
times, we have to dig deeper and get into the more gray areas. It's harder to
make clear and irrefutable statements about those, but no less important to
try to find some plausible arguments.

------
btilly
_They didn’t accept that their pizza simply wasn’t as good as that of
established pizzerias._

I actually remember this incident. In blind taste tests, McDonalds pizza was
judged as BETTER than competitors like Dominos. It certainly was not worse.

However if you repeated the taste test and told people where the pizza was
from, McDonalds lost. It turns out that branding strongly affects our
perceptions of taste.

Which underscores the challenges of trying to swim upstream against your brand
identity.

~~~
karjaluoto
I agree with you: branding does affect our perceptions of taste.

As for the statement, "their pizza simply wasn’t as good as that of
established pizzerias" I should note that Domino's wasn't the company I had in
mind. I was referencing the little pizzerias where the pizza is almost always
better than the fast food equivalent.

Heck, even Domino's admits that theirs isn't so great:
<http://www.youtube.com/watch?v=AH5R56jILag>

~~~
dagw
_"their pizza simply wasn’t as good as that of established pizzerias"_

Really, the same could be said about their burgers. In just about any city you
care to mention, you'll find small independent places serving far superior
burgers to what McDonalds offers, and that doesn't seem to have harmed them in
the slightest. I'm sure there are plenty of good reasons they got rid of the
pizzas, but I have a hard time believing it was because they weren't good,
since I distinctly recall them being at least much better than their burgers.

~~~
karjaluoto
If you re-read the passage, you might note that quality was only one of the
points raised. (And, in my opinion, not the key point of the argument.)

------
wushupork
McDonalds has many different offerings overseas. In fact McDs does have fried
chicken in Thailand and I recall my days in Malaysia that they had a McRendang
(rendang is a curry) as well as a teriyaki sauced based burger. They also had
blueberry pie filling which I thought was way better than apple. My point here
is that they also adapt to different markets.

KFC in Malaysia had a spicy chicken which was actually spicy. It's not limited
to just McDonalds, but lots of franchises have to adapt and test out what's
going to work with their environment.

------
edw519
I worked for McDonald's for years and went through many of their
"experiments". It took us workers about 12 minutes to figure out how well
something would work out. We often wondered who thought up this stuff up and
why didn't they ask us first.

Some of the losers:

\- A hard ice cream cone that was supposed to "soften" while the customer ate
their food. But no matter how much we pushed them, no one ordered them with
their meal. They came back for them, but they were too hard to bite into, so
people just stopped buying them.

\- Hamburgers with tomatoes. There just wasn't an easy enough way to handle
tomatoes at the volumes McDonald's does.

\- Grilled cheese. No one wanted them.

\- Plastic trays. They were supposed to reduce paper costs. But people just
left them on their tables, so we had to hire an additional dining room
cleaner, offsetting any savings. (Once they changed the garbage cans to have
tray receptacles on top, people got the hint and started using them again.)

On the other hand, there were some real winners:

\- The Egg McMuffin. duh. All that store capacity had been wasted on coffee
and donuts.

\- The Quarter Pounder. Hard to believe McDonald's was so successful with
those tiny burgers for so many years before.

\- And of course, the Big Mac, which was invented by my boss's boss in order
to compete with Eat N Park's Big Boy:

<http://www.pittsburghlive.com/x/pittsburghtrib/s_383369.html>

(The most amazing fact was that he lived to be an old man even though he ate
at McDonald's every day.)

~~~
bokonist
_Hamburgers with tomatoes. There just wasn't an easy enough way to handle
tomatoes at the volumes McDonald's does._

Interesting. My primary reason for always eating at Wendy's over McDonalds is
the tomatoes (well that, and Wendy's has a much better meat to bun ratio). I
wonder why Wendy's can handle the tomatoes, but not McDonald's? Is the volume
a problem at the individual store level, or at the corporate, bulk purchasing
and distribution level?

~~~
edw519
_Is the volume a problem at the individual store level, or at the corporate,
bulk purchasing and distribution level?_

The volume is not the problem. It's the solution.

At the time I worked there (long ago), McDonald's did from 300% to 1000% the
per store volume of any of its competitors. It was built for volume. That's
why the food is cooked before you get there, with default condiments. Tomatoes
and volume just don't mix well, too much labor and too much food cost.

Not sure if the volume ratios are still like that, but I wouldn't be
surprised.

------
dagw
I remember the McDonald's pizzas and seem to recall them being the best thing
they served. I was really sad to see them go. Sure they couldn't compete with
the best pizza places, but they could compete with everything else McDonald's
and their competitors sold.

~~~
ergo98
Second that. I loved their pizzas, and was disappointed when they disappeared.

------
dennisgorelik
The advise to "stick with one thing" goes against the advise of "iterate until
you hit a market fit".

Still it's a good set of marketing stories.

~~~
ebiester
I don't think so. The advice is, don't try to be everything. Iterating until
finding market fit isn't about trying to be everything; it's about finding
that one thing.

------
stcredzero
_Number two just seems foolish; boring marketing is about as sensible as
ordering flavorless food._

It makes sense for pregnant women. The substances with a distinct taste and
smell often arose as plant defenses, which aren't necessarily good for
developing babies. Don't know if that does anything for the analogy, though.

------
singer
This is an interesting article. However, most of it has nothing to do with
pizza or McDonald's.

------
decadentcactus
Aside from the Maccas bit, the article was pretty interesting, although this
as well as others seem to only focus on successful "be different" companies.
Or maybe it's the pessimist in me that thinks if I tried it, it'd fail
miserably.

