In a free market, consumer choice is king, and when those who pay the piper want fresher ingredients, even notorious junk food outlets like McDonald’s will be forced to change their tune.
McDonald’s is one of the largest chains in the world—selling food in 119 countries and bringing in $35.8 billion in 2013—but in a free market there is no such thing as a true monopoly. Just as Microsoft founder Bill Gates met his match when confronted by the garage startup which became Apple, so McDonald’s is facing growing competition from fast-casual restaurants like Chipotle.
Fast-casual is a fresh and rapidly growing concept, where fast food meets high class dining. Restaurants like Chipotle, Noodles & Company, and Panera offer more customized, freshly prepared and high quality food in a classy but laid back setting. Customers get the tastes and options of an expensive restaurant at fast food prices—a perfect blend for cash-conscious, health-nut Millennials.
These restaurants have hit the sweet spot, and grew by 11 percent in 2013. For the past five years, Chipotle’s revenue has grown by about 20 percent annually, while McDonald’s sits around 2 percent. Yes, the burrito joint still only garnered $3.2 billion in 2013—as compared to the fast-food giant’s $35 billion, but at this rate of growth, Chipotle has already cut into the market share significantly. Last November, McDonald’s reported a decline of 4.6 percent in U.S. sales.
McDonald’s, however, always quick to fit its business to consumer demand, has already announced menu changes to accommodate consumers’ increasing interest in healthier ingredients. Mike Andres, president of U.S. operations, told the Associated Press that the fast-food giant is considering different cooking procedures to freshen up its menu.
“Why do we need to have preservatives in our food?” Andres asked. “We probably don’t,” because McDonald’s restaurants go through supplies so quickly, and have a fast supply network. It may be entirely feasible to cut down on preservatives and take the “fat” out of fast food.
[pq]Individuals expressing their preferences prove more powerful than any corporation.[/pq]
McDonald’s also plans to launch a “Create Your Taste” program that lets people choose their own buns, cheeses, and toppings for burgers—much like Chipotle’s customized burrito menu.
This decision only confirms a general trend among fast food: the promise to get healthier—a “New Year’s Resolution” of sorts, as the Associated Press dubbed it.
On January 1, Subway started airing TV ads for chicken strips free of artificial preservatives and flavors. In December, Carl’s Jr. introduced an “all-natural” burger with no added hormones, antibiotics, or steroids. Chick-Fil-A is working toward fulfilling its 2013 promise to remove high-fructose corn syrup from buns and artificial dyes from its dressings, along with the promise to serve chicken raised without antibiotics in 5 years.
This only extends and deepens the trend begun about five years ago when fast food started serving salads along with burgers and fries. In a little while, we may even see an organic, grass-fed McChicken.
As psychophysicist Howard Moskowitz discovered when searching for “the perfect Pepsi,” there is no singular product that makes absolutely everyone happy. A cup of coffee engineered to please everyone will only get a 60 percent approval rating. Alternately, if a business designs a blend geared toward a specific group of people, the approval rating will soar to 78 percent. In short, the presence of more options makes the average consumer happier—and the business profits significantly higher. This is one reason fast-casual restaurants are booming, and fast food is hastening to catch up.
These developments serve to confirm Whole Foods CEO John Mackey’s declaration that as markets grow more sophisticated, profits and opportunity both increase. One company’s success does not necessarily come at another’s loss—rather, as each business vies to better serve the consumer, everyone benefits.
Perhaps to Michelle Obama’s chagrin, the move toward better nutrition which is finally bringing one of the largest companies in the world to its knees was not centrally planned by a government or a world-organizing body. Individuals expressing their preferences in a free market prove more powerful than any multinational corporation—and everyone will be healthier as a result.