A Tale of Two Deals – Chick-fil-A & McDonald’s

QSR Magazine recently released its annual Top 50 ranking of the largest restaurant and food chains. Two of the biggest stories in this year’s list were the continuing dominance of McDonald’s at the top spot, and the rising power of Chick-fil-A, which jumped two spots to number five.

Earlier this month, Chick-fil-A also came in as the top Fast Food Chain in MBLM’s annual Brand Intimacy study. And the impact was felt with the brand pushing past the $10 Billion sales even while operating less than a sixth of the stores that McDonald’s has. This amounts to an incredibly high revenue per unit figure that drives the brand’s incredible value.

Interestingly, both companies ran significant campaigns in August, so we decided to compare the relative impact of each while analyzing the unique characteristics of the industry’s golden arched standard and the rising powerhouse.

August Deals – BOGO vs. Mac & Cheese:

McDonald’s BOGO

On August 13th, McDonald’s ran a Buy One, Get One deal that saw an extended menu on offer for only $1. The deal was part of a wider push by the brand to boost US store visits in an attempt to rectify previous moves that failed to deliver to the brand’s high expectations. As CEO Steve Eastbrook said, “There [were] also some decisions we made with the best intentions that just didn’t work as well as we’d hoped.” So did the new campaign drive visits?

Not really. Visits to McDonald’s nationwide on the 13th were 15.0% below the baseline for the period beginning August 1st, 2018, and running through August 14th of 2019. And this may identify one of the few faults for the King of Fast Food. The calendar is incredibly steady with nearly year-round demand being impacted only by seasonality. There are limited self-created spikes, and while this shows steady performance, it also indicates a relative weakness in manufacturing spikes in interest and visits.

Chick-fil-A Mac & Cheese:

Chick-fil-A, on the other hand, looks to have found another winner with their latest menu addition. Traffic on the day of the release -August 12th – was 28.3% above the baseline for the same period. Comparing it with the same Monday in August 2018 – August 13th – saw a nationwide visit increase of 27.3%. While much of this does speak to the wider growth of the chain, there is a powerful element here that indicates the brands increasing capacity to drive excitement.

Long Term Effect?

It is hugely important to note that this analysis does not indicate a problem with McDonalds. The company has shown consistently strong visit performances, has a menu that delivers visitors throughout the day and has a powerful brand that resonates around the world. Looking Year-over-Year, the brand saw July visits in 2019 that were 11.1% above the baseline for the period between July 2018 and July 2019. This was over 13% higher than July 2018, when visits were 9.8% above the baseline.

Yet, Chick-fil-A has managed to position itself as one of the few brands with the long term potential challenge McDonald’s. They do this with a powerful per-store impact that allows them to efficiently grow revenue as they increase their physical footprint.

The question of innovation will be one that both brands will need to grapple with. Whether it be new menu items or even exciting technology acquisitions, the growth of Chick-fil-A remains among the more interesting narratives to watch.

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