Who is McDonald’s biggest threat?

Although Burger King and Wendy’s might be the first competitors that come to mind, according to a McDonald’s internal memo, the answer is “Doctor’s Associates”. Nothing to do with the medical profession but that is the name of the company that owns the largest fast food chain in the world, measured by the number of stores.

That would be Subway and as the graphic below shows, the last five years has seen nearly 10,000 new stores opened and they are now well ahead of McDonalds.

In response to the growth in Subway restaurants, McDonalds are referring to their chicken McWrap’s as a “Subway buster” and view it as the key product that will keep young consumers from choosing Subway for when they want a fast meal.

According to (presumably McDonalds own) market research, 22% of customers in the 18-32 age group would pick Subway if it was not for the McWrap. In addition, McDonalds is not currently in the top 10 of that age groups favourite restaurants.

So while McDonalds are very successful in attracting young children to the brand (I think when learning the alphabet, all of my children recognized M first), they are obviously having issues with keeping that brand loyalty as children age. The main issue is probably that they face very little competition in the young child demographic but the older the child gets, the more competition they face. And it is very difficult to own the hearts and minds of children and teenagers / young adults who may naturally want to pull away from the childish image that they may perceive.

The original article can be found here. It also mentions that one other issue for McDonalds in head to head comparisons with Subway is the lingering associations that people have – McDonalds with “Super Size Me” and Subway with their spokesman Jared Fogle who lost massive amounts of weight on a Subway rich diet.

An interesting class exercise would be to survey your students top five (or ten) fast-food restaurants. Combining the ranks of each students for an overall class rank would give an insight into where McDonald’s sits in their demographic.