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Late last year, McDonald’s announced that it would launch in 645 California stores its own TV channel that broadcasts news, sports, and local-interest stories. The move resonated loudly across the industry, signaling that food alone might not be the future of quick-serve dining rooms.
Rather, customized digital and television content may be the new best way to get customers to hang around the dining room for longer than the time it takes to scarf down a burger and fries.
The McDonald’s Channel is expected to reach nearly 20 million people each month and feature news catered to each local market. The channel will also integrate online and social-networking platforms such as Facebook and Twitter as part of McDonald’s ongoing effort to stay ahead of the curve in the fast-evolving Internet Age.
Little precedent exists to prove the viability of the McDonald’s Channel, as it is the first restaurant company to launch its own television network. But the iconic burger chain may be able to look to a fellow corporate giant for proof that it’s onto something.
Wal-Mart launched its own television network in 1998. Its in-store programming pushes products that customers can buy in the store, and it also serves as an advertising platform for other brands looking to grab the attention of the network’s vast viewership.
According to a 2005 New York Times article, the Wal-Mart TV Network “captures some 130 million viewers every four weeks, making it the fifth-largest television network in the United States after NBC, CBS, ABC, and Fox.” At the time, advertisers paid as much as $292,000 to show a single commercial for a four-week period, according to the article.
It is too early to know if McDonald’s is launching its channel to rake in advertising dollars, especially since the Oak Brook, Illinois–based company is being tight-lipped about the new venture. The topic did not come up in McDonald’s third-quarter earnings call on October 21. Furthermore, spokeswoman Ashlee Yingling says “it would be premature to speculate” on whether McDonald’s will roll out the channel in other markets.
Still, some restaurant analysts are hailing the McDonald’s Channel launch as a major sign of things to come across the industry.
“It seems to me that restaurants are just catching up to retail,” says Linda Duke, CEO of Duke Marketing in San Rafael, California. “I think it is the smartest thing they can do [because] creating an environment for consumers today is huge.”
Many quick-service chains, including McDonald’s, have recognized that 21st century consumers are looking for restaurants to provide an environment, or ambience, in addition to good food. It’s a major development in a sector traditionally oriented toward speed of service, not length of stay. Brands such as Starbucks and Panera Bread, with their lounge-friendly atmosphere and free WiFi, have done a particularly good job of meeting this demand, and McDonald’s itself has also adapted to the paradigm shift with new prototype stores.
As restaurants have remodeled their stores to accommodate customers who want to hang around, it was perhaps inevitable that they would capitalize on their captive audiences by providing exclusive in-store media content.
McDonald’s isn’t the first to offer a form of customized content. Starbucks, for example, offers exclusive online content through its in-store WiFi network. Offerings include iTunes downloads through its music blog and access to subscription editions of publications like the Wall Street Journal and New York Times. The Seattle-based coffee concept even partnered with Yahoo! in 2010 to bolster its content.
While plenty of restaurant chains have regularly updated YouTube channels, none has anything like the dedicated TV channel McDonald’s launched, says Jason Moles, marketing manager at foodservice equipment manufacturer Henny Penny.
“We don’t see a lot of evidence of [companies working on this] currently,” Moles says. “But with McDonald’s launching this effort now, if proven successful, we’ll see several others following suit.”
The reason a customized TV channel makes sense, Moles says, is obvious.
“In short, entertainment gives the customer a reason to stay in the environment, experience the brand at a deeper level, and, of course, create incremental sales,” he says.
To companies that aren’t McDonald’s, however, the jump into dining-room entertainment might not be so obvious. Spokespeople at other major quick serves, including Chipotle and Panera Bread, claim no such network is in their respective companies’ future plans.
Marketing analyst and author Shel Horowitz says McDonald’s competitors can be commended for their wait-and-see approach to the McDonald’s Channel strategy, which, he says, flies in the face of the trend toward giving consumers more choice.
“The days of intrusion marketing are really numbered,” Horowitz says. “People do not want to be interrupted by this, that, and the other thing by a company.”
Rather, Horowitz says, consumers want more control of their environments and will have a negative reaction toward something they have no say over in the dining room.
“The strategy of having in-restaurant TV is … in your face,” he says. “You can’t turn it off, and it’s not going to be the content you want to see when you want to see it. It’s going to be the content the restaurant is choosing to show at that moment.”