McDonalds is testing a new diner concept. The trial site in Kokomo, Indiana, will allow customers a choice of either the usual fast food or a sit-down menu in an updated 1950s diner. McDonalds is attempting to achieve its high growth targets by diversifying into other food products and new restaurant formats. With limited growth available in its traditional fast-food market, the new restaurant style may well be the shape of things to come.
McDonald’s fast food is an integral part of stereotypical American culture, and now the fast food chain is taking on another all-American concept – the diner. The fast food giant will be opening its experimental new restaurant, imaginatively referred to as “McDonald’s with the Diner Inside,” on Monday in Kokomo, Indiana.
The fast-food chain has integrated an updated version of a 50s diner with a typical McDonalds. While customers will still be able to get the usual fast-food items from the old counter and drive-through arrangement, they will also have the choice of 122 menu items, ranging from meatloaf to Belgian waffles. Patrons will sit at black tables with chrome trim and order food through specially provided phones while 50s music is piped through the speakers.
The new style of restaurant is part of a long-term plan to boost growth outside of McDonald’s traditional hamburger niche. The company has been acquiring restaurant chains such as Mexican restaurant chain, Chipotle, Donato’s pizza and Boston Market. The other half of the strategy involves finding new ways to boost sales within McDonald’s restaurants. This applies to both food items, such as cheese toasties and McSalad Shakers, and new restaurant formats. McDonald’s will be launching a trial McCafe in the spring, which, like the diner, will be inside an existing restaurant.
Following Wednesday’s profit warning, it is easy to see why McDonald’s is keen to try out new ideas. The established niche seems to be constantly beset by health scares, such as BSE and now foot-and-mouth, and reducing reliance on beef sales will make it less vulnerable in future. But there are also limits to the growth it can achieve in fast food. Investment in emerging markets is being reduced as their economies are not as encouraging as McDonald’s hoped, and competition is already ferocious in established markets. If the new format takes off, McDonald’s will be able to target a more family-oriented market, in particular the aging baby-boomers, and have another way to differentiate itself from competition.
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