Three Reasons Chipotle Is Destroying McDonald's
The fast-casual chain posted a 9.3% sales gain in 2013. Meanwhile, former parent company McDonald's saw sales fall by 1.4%.
The companies employ completely opposite strategies, Brian Sozzi at Belus Capital Advisors wrote in a recent note to clients.Sozzi shares a few reasons why Chipotle is dominating McDonald's.
1. Sticking to a classic menu. While McDonald's tacks on new menu items to entice customers, Chipotle has stuck to the same menu since it opened. The menu at McDonald's has grown 70% since 2007, Bloomberg reported last year. Chipotle does a few things really well, making it easier to execute and reduce customer wait times.
2. Making lines faster. Chipotle has aggressively worked to reduce wait times during peak periods. Meanwhile, McDonald's is struggling with the longest drive-thru wait times in decades. McDonald's is attempting to fix wait times by cutting some menu items and adding employees to assist at check-out. But the overloaded menu makes it difficult for operations to run smoothly, Sozzi says.
3. Emphasizing an ethical menu. Chipotle is in the process of eliminating GMOs from its menu, and has long boasted about its antibiotic-free meats. As a result, "people feel better about eating at Chipotle and share with others, personally or on social media, that positive experience," Sozzi writes. Meanwhile, McDonald's has struggled to shake its reputation as an unhealthy restaurant.