Chipotle gives McDonald’s “sellers remorse”

If you think you’ve got problems, maybe you should be running a fast-food company these days. The challenges faced by CEOs, brand owners and franchisees in the quick-serve-restaurant (QSR) business begin with disinterested customers, stretch to protesting workers, include problems with products and positioning, and extend to increasingly formidable competition.

But there’s no bigger problem than their tattered brands. McDonald’s, Burger King, Taco Bell and other fast-food giants are facing stagnation in their businesses mainly because they’ve been outplayed at the branding game by fast-casual competitors whose brands mean more – and more of what modern American consumers are looking for.

In a slow-growth economy, it might be reasonable to assume that value-oriented fast feeders would be growing while higher-priced fast-casual competitors would be suffering. But exactly the opposite is happening. Lured by sublime brands, and more healthful menus, Millennial consumers have been flocking to fast-casual outlets and leaving behind traditional fast-feeders – and so have more boomers.

Yes, McDonald’s faces problems specific to its brand ranging from a bad meat supplier in China to being at the center of protests over “living wages” to having an inexcusably lean pipeline of significant new products. But there’s no doubt that its much larger overriding problem is that more Americans consider McDonald’s irrelevant to how they live their lives, and especially to how to make their lives better.

But meantime, a brand like Chipotle holds out the promise that not only will a diner’s food be customized, but it also will be made completely fresh, and in about the same amount of time as at a McDonald’s. And, to boot, Chipotle uses only “natural” and healthful ingredients, supports family farmers and sustainability, and puts cool, philosophical sayings and random authors’ musings on their paper cups.

Chipotle’s food is better although it’s more expensive than McDonald’s. But also the brand experience – and the perceived meaning of the brand and of the experience of eating at Chipotle – now far outstrip the quality of the brand experience at McDonald’s.

Ironically, McDonald’s owned Chipotle until 2006. For a while, until a couple of years ago, McDonald’s had been able to ride its traditional advantages of speed, convenience and tastiness to new growth records. But wouldn’t brand stewards at McDonald’s like to change places with their colleagues at Chipotle right now?

Don’t be surprised to see dislocations at McDonald’s and other giant fast feeders that most people wouldn’t have deemed possible even a few years ago. The future of eating is brands that demonstrate how they build a better world.