You Deserve a Break Today (Craig Douglass On Consumers)

Remember that iconic advertising line? Well, the way the McDonald’s business has been going the past few years, everyone deserves a break — franchisees, customers and investors. After all, McDonald’s has been the leading restaurant in the QSR (quick-serve restaurant) category almost since posting on its double-arched signs the first 100 million burgers sold. And that was 1958. Not so lately. In 2014, top-line revenue dropped below 2012 results as net revenue dipped below 2010 levels. The recently released results for 2015 show sales $2 billion below last year.

Slower service. A cluttered menu. Declines in quality and taste ratings. And competition from retro burger joints like Five Guys, Shake Shack and homegrown copycats. All have contributed to McDonald’s decline. This past year the company closed more than 300 stores in the United States.

Then McDonald’s, under new CEO Steve Easterbrook, decided to heed national consumer research and take a bold, new and yet simple step: The most important meal of the day now has become the most important meal of the day, as McDonald’s unveiled in October its all-day breakfast menu. The results have been spectacular. And we should know, as your humble scribe had a little something to do with reinvigorating the McDonald’s breakfast menu back in 1991.

Here’s the story:

In early 1990, McDonald’s Corp. issued a challenge to local franchisees’ advertising agencies to submit ideas for a new breakfast entree. It seems that breakfast sales had gone flat, and the Golden Arches were in need of something new and exciting to jump-start breakfast sales. The local McDonald’s franchise cooperative was a client of Cranford Johnson (now CJRW), the state’s leading agency and where I had made a living since 1978, eventually directing client services. With the client’s urging, we took on the challenge, competing with McDonald’s corporate and over 100 other local agencies. (Local ad agencies are no stranger to creating McDonald’s products. The Happy Meal, Big Mac and Egg McMuffin were all created by local agencies.)

The directions were clear and simple: The new breakfast entree had to be easily deliverable at the drive-through and consumed “on the go.” This meant to us that it must be hand-held. It also had to be easily prepared within the limitations of McDonald’s kitchen operations. We decided it should at least have some ingredients already used in other breakfast and sandwich products. And the new breakfast entree had to convey value, meaning McDonald’s wanted to introduce it with a discount promotion and eventually sell it at a price point that would allow the cross-selling of other breakfast items (to increase the average check). We believed it should be 99 cents.

Our team’s creation was the breakfast burrito, which was described in the TV commercial as “Fresh scrambled eggs, green chilies, tomatoes, sausage, and cheese, all wrapped in a steaming hot tortilla.” We won! The $10,000 prize was awarded at the McDonald’s national convention in Chicago and accepted on the agency’s behalf by our team’s account executive, Kathleen Wilson.

Today, there are a wide variety of wraps for breakfast, lunch and dinner. But the breakfast burrito, which started it all, was created and consumer-tested right here in Little Rock.

McDonald’s is — and has long been recognized as — the consumer’s choice for breakfast on the go. In fact, breakfast at McDonald’s represents nearly 20 percent of overall sales. No wonder the all-day-breakfast decision appeared to be a no-brainer to new corporate leadership. If an enterprise is known for something, then building on that consumer knowledge and preference should provide incremental sales across the board.

The 2015 fourth-quarter results showed McDonald’s same-store sales rose 5.7 percent, beating estimates of 2.7 percent.

Breakfast started at the home of Ronald McDonald in 1971 with the Egg McMuffin. Our CJRW team reintroduced breakfast with the breakfast burrito in 1991. And now, with breakfast all day, McDonald’s customers are again enjoying the benefits of innovation based on a simple idea.

Oh, and the “You deserve a break today” theme, which was written in 1970, is no longer owned by McDonald’s. In 2014, it gave up the trademark to the phrase.

Craig Douglass is a Little Rock-based advertising agency owner and marketing and research consultant. Email him at Craig@CraigDouglass.com.