Big Mac Strikes Back

Burger bashers, watch out! McDonald's is on a roll

  • Share
  • Read Later

(2 of 5)

Indeed, McDonald's has become such a pervasive reference point in American life that many consumers think of the company as a public institution -- one that is often more reliable than the post office or the phone company. McDonald's estimates that 95% of all U.S. consumers eat at one of its restaurants at least once a year, and that the average customer visits the chain 20 times annually. The company claims to serve 17 million U.S. customers each day, providing more than 11% of all dinners away from home and 25% of breakfasts. Observes Conrad Kottak, professor of anthropology at the University of Michigan: "You can hardly spend a day without seeing a golden arch. It's a symbol of security."

The golden arches stand tall over the competition in the huge fast-food industry, which rang up sales of $50.5 billion last year. McDonald's market share: 19%, in contrast to Burger King's 9% and Wendy's 5%, according to Analyst William Trainer, who follows the industry for Merrill Lynch. While the other hamburger chains posed fast-growing threats to McDonald's in past years, the rivals now have generally turned down the heat on their expansion.

One major reason for McDonald's dominance is the company's huge advertising budget, which amounted to an estimated $700 million last year, far more than its next two competitors combined. Burger King stumbled during the past year with its nerdy "Where's Herb?" campaign, while Wendy's has been unable to follow up on the success of its faddish "Where's the Beef?" commercials. But McDonald's made a big impression once again with commercials portraying the chain as a caring institution. "We spend a bundle trying to stimulate good feelings about the company. We don't knock our competitors," says Michael Quinlan, the company's 42-year-old president and chief executive. One McDonald's spot, called "Silent Persuasion," in which one deaf student uses sign language to propose to another that they visit a McDonald's on the way to the beach, was the second most popular U.S. commercial of 1986, according to Video Storyboard Tests, which polls consumers.

McDonald's has cooked up some popular new products too. Its McD.L.T. sandwich, a lettuce-and-tomato burger packed in a two-compartment box to keep the hot side hot and the cool side cool, has proved to be a beefy competitor to Burger King's Whopper and Wendy's Big Classic. The McD.L.T., introduced nationally early last year, is the company's biggest success since Chicken McNuggets debuted in 1983. At the moment, McDonald's is test-marketing a more unexpected offering: McPizza.

As McDonald's outlets multiply, the company is taking an increasingly important role as an employer. The company currently carries more than 560,000 workers on its payroll, up from 233,500 ten years ago. Yet most McDonald's employees start at the minimum wage of $3.35, which for a full-time worker amounts to only $6,968 a year. For that reason, McDonald's has been singled out as evidence of the booming service economy's inability to create dignified and meaningful new work. Says Robert Reich, a lecturer at Harvard's Kennedy School of Government: "Compared to the old blue-collar jobs that have been lost, these jobs represent a serious setback."

  1. 1
  2. 2
  3. 3
  4. 4
  5. 5