Posted by Kevan Lee :: February 5, 2009 @ 9:57 amWelcome your new fast food overlords.
In a down economy, the titans of industry have thus far proven to be the ones living under golden arches and doling out two all beef patties, special sauce, lettuce, cheese, pickles, onions, on a sesame seed bun. McDonald's and its fast food brethren are enjoying success in light of failure all around them, as consumers flock to cheap eats while money is tight.
Last week, McDonald's announced an 80 percent rise in net profit for last year, ballooning from 2.3 billion dollars to 4.3 billion. They were one of only two companies in the Dow Jones industrial average to see a rise in share price in 2008 (Wal-mart and those nutty rollback prices being the other).
The AP quoted McDonald's chief executive Jim Skinner as saying, "2008 was a strong year for McDonald's." It may have been the biggest understatement since the Arch Deluxe sandwich.
McDonald's' success bodes well for the future of other fast food restaurants as well. Many of the same principles that helped build Mickey D's into a powerhouse - value, efficiency, quality - are shared by other fast food luminaries such as Wendy's, Jack in the Box, and Burger King. Each of these restaurants should stand to gain with the economy turning for the worse. Those consumers who aren't satisfied with McDonald's can easily turn to any number of other quick options for the cheap grub they desire. Things are looking up for the Carl's Jr.'s of the world.
The secret weapon for these big players in the battle for Americans' dollars is the value menu, that bastion of calories and affordability. Some places even choose to call it the Dollar Menu or the 99-cent Menu, just to make it clear to consumers how serious they are about offering cheap eats. McDonald's made the value meal (a historic collection of burger, fries, and a drink) famous, and they are leading the charge for a la cart options, too. Their radio ads and commercials are a constant reminder that the economy is a lot less bleak with a $1.00 hot fudge sundae. What recession, says the dollar menunaire.
If affordability is the name of the game when it comes to dining out, then it is no wonder that the restaurant biz and the scores of high-priced eateries are struggling. As money grows tighter, there is a trickle-down effect that happens in fine dining: the steak-and-lobster crowd visits more chain eateries, the chain crowd visits more diners, and the diner crowd visits more fast food restaurants, and the fast foodies order more Big Macs. It's survival of the fittest (and cheapest) in a way that would have made Darwin proud.
How can the sit-down restaurant compete in today's economy? By being more like McDonald's, of course. Change and adaptation are necessary; it would appear, judging by the numbers released last week from the National Restaurant Association (the other NRA). Their restaurant index - a measure of factors like sales and traffic, extracted into an all-encompassing report - has been setting record lows on a monthly basis, and there are no signs of stopping.
It may be time for a value menu or two. Cheap prices are one of many ways that restaurants are trying to boost business and save money. Other trends include smaller portions and a reduced staff; restaurant owners are desperate to try anything that works. Perhaps starting a fast food franchise would have been a better option.
Their growth could not be more opposite from the struggles from the traditional sit-down restaurants. McDonald's recently ran off a string of 55 consecutive months of increases in global same-store sales, a remarkable feat considering the world economy's current state. Traditional restaurants are getting left in the dust, and the success of McDonald's and other fast food chains begs the question: What will the future hold for these heavy hitters?
It is interesting to think that the nation's food industry could soon be run by fictional folks like the Hamburglar and Dave Thomas' daughter. Depending on how long the economic crisis drags out, the fast food restaurant may be the last restaurant standing once the dust settles. So when the economy builds itself back up, the Dairy Queens and Chick-fil-a's may suddenly find themselves calling all the shots.
In this fast food future, we may see our first fine dining Hardee's, complete with dinner reservations and a coat check. The posh downtown restaurant that hosts executive dinners and high-powered business lunches might have its own ball pit and refillable soda station. Weddings and anniversaries might be catered with Whoppers, street vendors might be hawking Jumbo Jacks, and dear old dad might be cutting the Thanksgiving Baja Chalupa.
The more popular these fast food chains become, the quicker we are to realizing a fate similar to this. And who's going to stop it from happening?
Even still, who's going to object?
A world in which Ronald McDonald rubs elbows with the surgeon general is a world that Americans would not necessarily hate at this point. We have no one to blame but ourselves for the French fry avalanche that we've begun. McDonald's reports that the average number of customers their restaurants serve each day has reached more than 58 million. Add to that number the diners at other fast food stops like Burger King and Wendy's, and it is easy to see how prevalent these fast food giants have become.
McDonald's and Co. are here to stay. They are posting big numbers, they're growing with customers, and before we know it, they might just take over the restaurant biz.
So long as they keep the special sauce coming, don't expect anyone to complain.
4 Comments
Unfortunately, basing your diet around fast foods will likely undermine your health, and my guess is many of the people who eat at these establishments out of necessity may not have health insurance coverage. That leaves the rest of us to subsidize their health care with our rising premiums.
I may need some time to fully digest your points here, but I would just like to throw up to you that fast food can in no way compare flavor-ably nor nutritionally with real food. It may be cheap, but what will the ultimate cost be in the health of those consumers who eat more fast food than they already do and if more join them.
Not relate to your article (except for the connection in my mind) is something I notice every time I go to a grocery store (and I am very catholic when deciding which store to patronize). There is always one part of one aisle that is label "natural food." Doesn't that just beg the question --What is the food in the rest of the store?
I may need some time to fully digest your points here, but I would just like to throw up to you that fast food can in no way compare flavor-ably nor nutritionally with real food. It may be cheap, but what will the ultimate cost be in the health of those consumers who eat more fast food than they already do and if more join them.
Not relate to your article (except for the connection in my mind) is something I notice every time I go to a grocery store. I am very catholic when deciding which store to patronize. There is always one part of one aisle that is label "natural food." Doesn't that just beg the question --What is the food in the rest of the store?
Jane, just so you are aware, the term 'natural' on food labels doesn't signify anything meaningful. A good rule of thumb for label reading is 'don't believe anything on the front'.
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