I heard on the radio this morning that McDonald’s revenue was up 4.5 percent in May. This is the third month in a row that the company has seen financial gain, due in a large part to the strategy behind its new McCafé branding.
The introduction of the McDonald’s Frappé was a risky and aggressive move for the fast-food chain. During a major recession, it takes nerves of steel to commit to a large-scale investment in equipment, operations, marketing and changes to restaurant facilities.
But McDonald’s assault on Starbucks and other similar venues was absolute genius.
The Frappé is almost as tasty as a Venti Whatever, and a whole lot cheaper. Moreover, with the McCafé, McDonald’s now can become a place where one goes specifically to pick up a summer beverage rather than a venue that exists solely to sell food, with the drink as nothing but an add-on.
On a different — but related — note, I was chatting with my neighbor the other night and he shared a piece of news that surprised me. Francisco is from El Salvador and works as a hospital orderly. He has two years left to go before owning his home free and clear (15-year mortgage), and recently he purchased a second house nearby to use as a rental property.
“You bought another house?” I asked incredulously.
Francisco is 55 and his job is not especially secure. I asked if he was concerned about making such a big investment during an uncertain economy.
“This is my time,” he said. “Prices are low and people are scared to buy anything. You know what they say about the turtle: He only gets ahead by sticking his neck out.”
Two very different stories with one moral: Taking risks can pay.
When times are tough, people tend to hunker down and conserve what they have rather than looking for opportunity. But there’s plenty out there if you’re willing to take a chance.
A number of firms in this industry are expanding into new areas, unveiling fresh products and investing heavily in marketing. It’s a move that may seem daunting now, but, as we’ve seen with McDonalds, it’s a strategy that can pay big dividends.