You missed the point. I am proposing that the CEO whining that their prices have been pushed beyond the reach of their core customers is an excuse. I am proposing that their soft sales are due to people tiring of the poor quality food and poor customer service. I ever tell you about the time I waited a half hour for my food at Micky D’s, and still didn’t get it until I went back to the counter and started barking? Or another time, when I waited at the counter, and waited, and waited. Someone finally took the order of the guy in front of me, then walked away, leaving me standing there. Or the time I was told I had to use the kiosk, because they didn’t staff the counter, and the kiosk did not print out a receipt for my purchase?
I get that. What you haven’t explained is why the soft sales are at the low end of the income spectrum. The obvious explanation is that the prices have become too high for them. You are trying to avoid the obvious but haven’t offered an alternate explanation as to why the poor food quality would affect lower income customers more than higher income customers.
People are making more and eat elsewhere marginally.
People did more cooking during the pandemic. Our culture shifted in this regard.
The Alpha Generation is very small. MCD and other fast food restaurants are parent-child consumer-based. The Z Gen is outgrowing fast food. The low-income Boomers can not afford it. More X Gen and Millennials are becoming ultra health conscious.
Opportunity costs swing both ways. If you do not quickly know the opportunity costs do not invest.
Where is the data that says the soft sales are at the low end? I read the linked article. The CEO claimed they were losing low income customers, but there was no data offered. Would a CEO lie, especially to cover up his own mistake? Of course he would.
A business model that relies on paying people who work less than a fair livable wage, isn’t a recipe for a sustainable business.
Oh I don’t know. The South got away with it for 200 years, and McDonald’s has been getting away with it for almost 75. (Not to mention the cheap fast fashion stuff being sewn by children in Thailand or wherever, the iPhones being assembled by countless drones in dormitories in China, and the tsunami of other goods coming in from underdeveloped countries.
Eventually, one hopes, the world will find a way to balance consumption with “living standards” for workers, but that will take a revolution as big as the industrial one of the 1800’s. Maybe AI is it, but I have my doubts.
Your question doesn’t really follow, but as you know there is more than one product/business strategy. For example, one can emphasize quality and the customer experience. One, however, has to charge more. At the other end, one can minimize the “frills” and just give a bare bones product/service at a low cost. Or one can navigate a middle course. There are usually multiple successful business strategies for each market. Pretty basic B-school stuff.
The engineering version is: fast, good, cheap. Pick two.
Shiny management has it’s own objective: not a “fair” profit, but “maximum” profit. Look at the screeds from auto industry management, particularly Ford and VW. It is all about inflating GP. Recent developments in the EV market make me wonder if the automakers’ embrace of EVs was entirely motivated by Tesla’s fat margin. Now that Tesla’s margin has narrowed, the “me too” companies are scaling back their EV push.
Steve…another 200 post Tesla thread starts in 3…2…1…