McDonald's Seniors' Restaurant - Robert

Instructor's Notes

Lisa Aham's strategy is evolving – at least with respect to her senior citizen customers. She is
encouraging a friendlier "product" and her target customers are responding. As long as this
strategy does not conflict with her other "fast-food" strategies for other customers at other time
periods, there seems to be no problem. NOTE: Most of the seniors do leave by 11:30 am,
before the noon crowd. Regarding the bingo idea, "parties" are now allowed, so this could be
considered as a "bingo party." Bingo might cause some seniors to stay longer, however, and, if
the "seniors" come in greater numbers and/or stay longer and begin to "crowd out" other target
markets, then she may have to change her evolving senior citizen strategy.

(Note 1: This case is adapted from what did happen in a Detroit, Michigan McDonald's
restaurant. The bingo idea was not used there, however, just the heavy emphasis on seniors.)
(Note 2: McDonald's and some other fast-food places are allowing modification of their basic
strategies to suit local conditions. McDonald's, for example, is even changing its exterior design
and interior decoration to meet planning commission requirements and/or to "fit in" to the
surrounding area.)

This case is placed first in the set of cases to help make the point that market-oriented strategy
planning is not just a big manufacturer activity. Further, it can be used to show that a particular
business may have to create and implement several strategies at the same time. It also can be
used to emphasize that friendly personal service can be an important part of a firm's "Product."

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Lisa Aham is the manager of a McDonald's restaurant in a city with many “seniors.” She has
noticed that some senior citizens have become not just regular patrons—but patrons who come
for breakfast and stay on until about 3 p.m. Many of these older customers were attracted
initially by a monthly breakfast special for people aged 55 and older. The meal costs $1.99 and
refills of coffee are free. Every fourth Monday, between 100 and 150 seniors jam Lisa's
McDonald's for the special offer. But now almost as many of them are coming every day—
turning the fast-food restaurant into a meeting place. They sit for hours with a cup of coffee,
chatting with friends. On most days, as many as 100 will stay from one to four hours.

Lisa's employees have been very friendly to the seniors, calling them by their first names and
visiting with them each day. In fact, Lisa's McDonald's is a happy place—with her employees
developing close relationships with the seniors. Some employees have even visited customers
who have been hospitalized. “You know,” Lisa says, “I really get attached to the customers.
They're like my family. I really care about these people.” They are all “friends,” and it is part of
McDonald's corporate philosophy (as reflected in its website, www.mcdonalds.com (Links to an
external site.)) to be friendly to its customers and to give back to the communities it serves.
These older customers are an orderly group and very friendly to anyone who comes in. Further,
they are neater than most customers and carefully clean up their tables before they leave.
Nevertheless, Lisa is beginning to wonder if anything should be done about her growing “non-
fast-food” clientele. There's no crowding problem yet, during the time when the seniors like to
come. But if the size of the senior citizen group continues to grow, crowding could become a
problem. Further, Lisa is concerned that her restaurant might come to be known as an “old
people's” restaurant—which might discourage some younger customers. And if customers felt
the restaurant was crowded, some might feel that they wouldn't get fast service. On the other
hand, a place that seems busy might be seen as a “good place to go” and a “friendly place.”

Lisa also worries about the image she is projecting. McDonald's is a fast-food restaurant (there
are over 32,000 of them serving over 60 million people in over 100 countries every day), and
normally customers are expected to eat and run. Will allowing people to stay and visit change
the whole concept? In the extreme, Lisa's McDonald's might become more like a European-
style restaurant where the customers are never rushed and feel very comfortable about
lingering over coffee for an hour or two! Lisa knows that the amount her senior customers spend
is similar to the average customer's purchase—but the seniors do use the facilities for a much
longer time. However, most of the older customers leave McDonald's by 11:30, before the noon
crowd comes in.

Lisa is also concerned about another possibility. If catering to seniors is OK, then should she do
even more with this age group? In particular, she is considering offering bingo games during the
slow morning hours—9 a.m. to 11 a.m. Bingo is popular with some seniors, and this could be a
new revenue source—beyond the extra food and drink purchases that probably would result.
She figures she could charge $5 per person for the two-hour period and run it with two
underutilized employees. The prizes would be coupons for purchases at her store (to keep it
legal) and would amount to about two-thirds of the bingo receipts (at retail prices). The party
room area of her McDonald's would be perfect for this use and could hold up to 150 persons.

Evaluate Lisa Aham's current strategy regarding senior citizens. Does this strategy improve this
McDonald's image? What should she do about the senior citizen market—that is, should she
encourage, ignore, or discourage her seniors? What should she do about the bingo idea?
Explain.

Do the alternatives address and resolve the problem statement?

Does the alternative achieve the objective? (What’s the objective?)
Mutually exclusive (cannot be combined)
Advantage and disadvantage
STATEMENT OF THE PROBLEM
- Utilizing strategy/alternatives regarding customer traffic of senior citizens and
younger generations. The commencement of the latter case would lead to
McDonald’s image, either being a non-fast-food restaurant or not.

ALTERNATIVE SOLUTIONS:

1. OFFER RECREATIONAL ACTIVITIES

Description:
● Offering recreational activities such as bingo would encourage more seniors to
patronize. Also, it could generate income that could cover their hourly stay
expenses.
Advantages:
● Customer engagement in activities that could make their stay more fun yet could
generate additional income.
Disadvantages:
● Failure to control the customer mass flow might change the profile of the
business.

2. SENIOR CITIZEN DISCOUNTS

Description:
● Concluding that seniors have the capacity to buy made them one of the target
customers yet giving them discounts could increase their capacity.
Advantage/s:
● An increase in purchase power leads to more sales.
Disadvantage/s:
● The possibility of an increase in the population of Seniors in customer traffic
leads to decreasing numbers in young generations.

3. PRODUCTS THAT ARE PATRONIZABLE BY THE YOUNGER GENERATION

Description:
● By creating a product that could pique young consumers' interest, then the goal
to attract them could be achieved.
Advantage/s:
● There would be a good balance between seniors' and young consumers' traffic.
Good balance means there would be the least possibility that the business profile
would be on edge for being a non-fast-food one.
Disadvantage/s:
● Uncertain if young consumers would patronize the product. Market promotion
activities could be costly.
4. SEPARATE AREA FOR SENIORS AND YOUNGER GENERATION
Description:
● Having different areas for seniors and young consumers to enjoy their own
solitude would be nice. Knowingly that the latter parties have different dining
etiquette. The manager could have an area for seniors, young consumers and
both (this includes family dining).

Advantages:
● There would be an exclusive area for customers to enjoy wherein there would be
the least possible disturbances.
● There would be a good balance between seniors' and young consumers' traffic.
Good balance means there would be the least possibility that the business profile
would be on edge for being a non-fast-food one

Disadvantage:
● The commencement of the plan would incur additional expenses, an additional
reports/research regarding customer flow would be conducted in order to utilize
the right space.

CONCLUSION:
Seniors in customer traffic are inevitable. The manager might worry about
the crowd today but the young consumers will soon be patronizing the shop in
the near future, considering the going concern principle, the strategy of having a
separate room for seniors to hang out in, would be an excellent strategy
considering the consistency of their patron.
The goal is to have the loyalty of the seniors while holding on to the
image of being a fast-food chain for the reason that having more senior patrons
might change its profile to old people’s place where customers are not for the
fast-food theme but on the one to two-hour coffee break. Having separate rooms
for them would utilize the customer flow in an exclusive-inclusive manner. The
commencement of the plan would incur additional expenses, an additional
reports/research regarding customer flow would be conducted in order to utilize
the right space. Nevertheless, having the right research outcomes could lead to
better management and additional income. Sliding more on the senior
consumers’ side could generate a fixed average daily income through
established customer loyalty.