Back in 2006, McDonald’s saw its growth stall. The fast-food chain decided that the problem was its limited menu, so it tried out a great many new items and ended up doubling the offerings. But sales hardly budged. Finally, in 2016, it took a new tack. It went back to basics, dropped most of those additional items, and instead extended its popular breakfast offerings. Sales finally jumped, with same-store revenue up 6% in 2017, and the stock rose by 40%.
Why Adding More Products Isn’t Always the Best Way to Grow
Lessons from McDonald’s and eBay.
August 28, 2018
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Summary.
Product expansion is often used as a path to growth, but it can have unintended consequences for other aspects of the business — including the customer experience central to the company’s value proposition. Indeed, current trends are moving away from broad offerings in many industries. A recent poll had 64% of consumers saying they would pay more for a simpler, more convenient experience. The trick is, growth strategies have to fit the company’s current context, especially its brand promise and its target market. Once the company has a strategy to fit the context, it can sequence out the various steps to implement it. For example, McDonald’s had known for years that customers wanted all-day breakfast, but to be able to offer it, it first had to streamline and revamp its kitchens.