Such customization is another contemporary trend integral to the popularity of hot concepts like Cold Stone Creamery and Chipotle. Cold Stone isn’t skittish about selling any mix-ins its customers have a hankering for—Twinkies, gummy bears, apple pie filling—no matter how unappealing they might sound to the folks in the test kitchen. Likewise, Chipotle offers its own array of choices, many of them fresh and healthful. Customers select their meat and beans, their sauces and toppings, their drinks and sides. Competitors such as Taco John’s and Del Taco have extensive, appealing menus but give customers few opportunities to mix and match.
By rights, Baja Fresh Mexican Grill should have excelled using a formula similar to Chipotle’s, but it fell victim to, well, Chipotle—proving that the execution is as important as the plan. Parent company Wendy’s has been tinkering with Baja Fresh for several years in an effort get the Fresh-Mex concept noticed. But Wendy’s hasn’t been able to rev up the chain’s horsepower enough and talk of selling off the asset is said to have reached the negotiating table.
Burger King had an early lock on mass customization with its 1974 “Have It Your Way” ad campaign. The company revived the slogan in 2004 and continued the campaign into 2005. BK reclaimed its number 2 perch on this year’s list, and although systemwide sales showed only a slight increase, same-store sales have posted consistent gains.
Burger King CEO John Chidsey, who ended turnaround titan Greg Brenneman’s brief tenure in a surprise mid-IPO shakeup, said he’s counting on escalating interest rates and steep gasoline prices to funnel customers toward BK’s value-priced menu. Brenneman, who was brought back on board early in 2006 as a handsomely compensated consultant, left his signature on sensible initiatives such as introducing a smaller, less costly prototype for BK stores. Sales at the new units are expected to keep pace with those of larger stores.
Meanwhile, Wendy’s can’t seem to settle on a coherent strategy, and the company’s report card continues to reflect that indecisiveness. The chain ceded the coveted number 2 spot on our list in 2005. According to Wendy’s own disclosures, same-store sales at its core burger business were down for the first time in 19 years, with a 3.7 percent decline at U.S. company-owned units and a 3.1 percent decline at franchise stores. Wendy’s blamed lost operating days following hurricanes Katrina and Rita, double-digit increases in beef costs, and the now-infamous but no less contemptible chili finger incident.
Research supports Wendy’s claim that rising gas prices have hurt business. A survey conducted by Technomic, Inc., in late August 2005 found that 18 percent of consumers had cut their spending at quick-serve restaurants because of inflated prices at the pumps. Nevertheless, the NRA reports that the proportion of the food dollar allocated to meals eaten away from home continues to increase.
Wendy’s says it’s taking stock of its business and focusing on profitability rather than merely on racking up sales and opening new units.
Sustainable growth, in fact, was the management strategy du jour in 2005 and represents another notable trend. It’s a sensible antidote to the explosive growth posture that companies such as Cold Stone Creamery have adopted during the last few years. Wendy’s blueprint for sustainable growth, for instance, has translated into clos-ing 40 underperforming units in 2005, curtailing investment in new company stores, selling company-owned stores to franchisees, and taking advantage of sale-leaseback arrangements.
The company can only hope that its approach is as successful as the sustainable-growth plan Checker’s has implemented on a smaller scale. Faced with operational losses and mounting debt, Checker’s got its groove back by unloading company-owned units and freezing expansion.
If Wendy’s reminds us of the loner who’s trying to find himself and Checker’s is the dude with the garage band who lands a recording deal, McDonald’s is more like the kid who always knew he wanted to become a doctor. Only this guy is definitely in it for the money.
In 2003, now CEO Jim Skinner and his predecessors Jim Cantalupo and Charlie Bell hatched the Plan to Win. The untimely deaths of Cantalupo and Bell in quick succession did nothing to shake Skinner from the trio’s original agenda.
The plan’s financial strategy calls for sustainable growth, which means placing a higher priority on improving the performance of individual restaurants. McDonald’s AUV increased $85,000 in 2005 and profitability measures were up across the board.
The plan’s shrewd two-pronged menu strategy retains a value menu to keep the budget-minded customer from straying but promotes healthier, fast casual–style fare for those with a buck to spare. The unwieldy “Made Your Way” initiative has been scrapped in favor of a “grill direct” food-prep system, in which sandwiches are pre-grilled and then customized to suit individual preferences. Premium touches here and there, such as Newman’s Own salad dressings, Dannon yogurt, and Diamond walnuts, show frill-seeking customers that McDonald’s wants every American to have the best, no matter how unfashionable her zip code might be.