McDonald’s and Chipotle Battle It Out
As McDonald’s struggles with flat-lining, even falling, sales in and outside North America, Chipotle continues with its unprecedented rise.
Quarterly reports indicate that the largest food chain in the world has dropped 3.3% in same-stores revenue, coupled with unimpressive customer traffic which is seen as a result of its recent price hikes. Chipotle, on the other hand, has upped its sales by 19.8%, with customers coming in despite the price increase.
While both dominant fast-food companies are essentially earning, Chipotle has been getting the lion’s share in terms of success rate and popularity. Experts point to the fact that as customers increasingly become health-conscious, which the company strives to offer through its healthy ingredients freshly prepared and presented in its burrito-dominated menu. In addition to simple and healthier menu selections, Chipotle has always emphasized streamlined process of ordering for customers.
Even so Chipotle’s remarkable climb to success does not, in any way, for McDonald’s to give up just yet. Established 60 years ago, the multi-billion dollar currently serves 68 million customers in nearly 120 countries across the globe. Leveraging extensive international reach, coupled with solid per-restaurant franchising revenues, the iconic American fast-food company is still at an advantage. McDonald’s has also revealed plans on revamping its marketing systems to lay greater emphasis on the menu and improve food quality.
Expert opinions demonstrate a significant divide. Some believe Chipotle’s rise may well indicate a newfound customer preference for the healthier alternative – which may mean the end of the Golden Arches. Others don’t see that as a threat, considering McDonald’s massive customer base of loyal burger-and-fries diners in and out of the United States. Analysts agree on one thing though: McDonald’s needs to keep up, and Chipotle has yet a lot to prove.
In a recent report, Yahoo Finance offered a glimpse of the diverse worlds of the two leaders as they reshape the current fast-food chain industry:
For Oak Brook, Ill.-based McDonald’s, home of the Big Mac and fries, that tone is one of desperation, nearing despair. At Denver’s Chipotle, the burrito seller that’s emerged as the leader of the growing fast-casual restaurant segment, it’s hope and optimism, bordering on arrogance.
Comments from McDonald’s CEO Don Thompson noted that his company’s results “reflect a significant decline versus a year ago, with our business and financial performance pressured by a variety of factors.” While reminding us all of the Golden Arches’ “enduring brand and strong financial foundation,” he states that “by all measures our performance fell short of our expectations.” Further, McDonald’s is forced to try and show the world “that we understand the problems we face and are taking decisive action to fundamentally change the way we approach our business.”
This is the planet’s largest publicly traded restaurant chain.
At Chipotle, founder and co-CEO Steve Ells continued to send the message that his company is determined to change the way people think about fast food, an approach that “results in better quality food and a compelling dining experience for our customers, and superior business results for our shareholders. The way we source, prepare and serve our food; the way we hire, develop and empower our people; and the way we operate our business is very different than the traditional fast food model. Industry trends, he says, “suggest the Chipotle model is resonating with customers, who are realizing there are better alternatives to traditional fast food.”
This is from a two-decade-old 1,700-store operator that was at one time majority-controlled by McDonald’s.
Photos by Mike Mozart