Can McDonald’s outlive the rise of fast casual?

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By Jacob Maslow

mcdonalds store rochester hills
The McDonald’s location on Rochester Road in Rochester Hills, Michigan. Founded in 1940, McDonald’s is a chain of fast food restaurants with over 33,000 locations worldwide.

Fast casual is the current trend in the restaurant industry that has sent McDonald’s (NYSE:MCD) reeling. McDonald’s simply cannot compete with the increased expectations consumers have regarding their restaurant experience. Their customers are looking for better food, better quality, and a better overall experience. Fast casual has definitely ravaged McDonald’s and benefited chains like Chipotle, Buffalo Wild Wings, and similar types of restaurant operators. There is a sea change in customer preferences when it comes to restaurant food. McDonald’s is a relic of that time in America’s past when quality can take a second billing to comfort, convenience, and speed. This is no longer the case. McDonald’s stock is suffering as a result of this sea change.

While a lot of the discussion regarding fast casual’s effect on fast food centered on burgers and burger restaurants, it’s interesting to note that it hasn’t had such an effect on the pizza space. Americans consume pizza to the tune of $38 billion dollars. That’s how big the pizza delivery and pizza restaurant market is in the United States. Among the big players in this space is Domino’s Pizza (NYSE:DPZ) .

Domino’s has just staged a massive rally. For quite a long time, Domino’s went through a decline. Domino’s wasn’t exactly the first brand to come to mind if you are looking for quality pizza. In fact, if you bought Domino’s stock at the end of 2008 you would’ve scooped it up at a bargain price of $4.71. Now, Domino’s stock is valued at $104.50. That’s how amazing the Domino’s turnaround has been.

What did Domino’s do? It listened to its customers. It had to endure a lot of negative criticism and came up with new recipes that totally revitalized its product line. Not surprisingly, the trend towards fast casual hasn’t hurt Domino’s at all. Domino’s is just racking up tremendous sales, revenues, and profits. Maybe McDonald’s should pay attention to the pizza space and figure out what they’re doing right. The window of opportunity for McDonald’s, no matter how big, isn’t going to stay open forever. If McDonald’s is looking to turn itself around, it should look into the case of Domino’s.

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