Mc Donalds Breakfast case.

1. Advertising Effectiveness Awards
1999
Advertising Federation of Australia Limited, Level 1, 201 Miller Street,
North Sydney NSW 2060,
PO Box 166 North Sydney NSW 2059
Australia
Tel: +61 2 9957 3077 Fax: +61 2 9957 3952
Agency: DDB Sydney Client: McDonald's
Refusing to Plateau: How Advertising Turned a Trend Around
INTRODUCTION
In 1986 McDonald's started serving breakfast. Their aim was to 'make breakfast at McDonald's
appeal to everybody'. By 1996, McDonald's had created a $220 million dollar breakfast fast food
market. The contribution advertising made was established in Effective Advertising 4.
In 1997, sales continued to grow. However, underneath the impressive sales curve was evidence
that the growth in 'same store sales' (comparative sales or 'like for like') was dropping significantly.
Instead of a franchisee achieving sales growth at breakfast of 16% plus (as in 1994 and 1995), in
1997, this same store sales growth was only 2.6%. McDonald's had created and succeeded in
owning the breakfast part of the day. However, penetration had to plateau eventually. By mid–1997,
there were signs that this might be the case. The growth of the business was in major decline.
Sales growth was being generated by new store openings.
In 1998, a change in creative direction breathed new life into the market, attracted new users to
McDonald's and grew same store sales.
This is the story of how a decline in growth was turned around without resorting to the usual retail
reaction of price discounting or changing the menu. See Figure 1.
THE TASK
The role of the advertising in 1998 was to stop the decline in same store growth by persuading new
people to visit McDonald's for breakfast.
The marketing objective for 1998 was to increase the penetration of McDonald's breakfast
customers as a proportion of Quick Service Restaurant (QSR) users from 11.8% to 14%. They
wanted to make breakfast appealing to even more people.
THE CHALLENGES
There were a number of barriers obstructing those goals.
Decline in the whole fast food category
To give the task some context, the reason the objectives were so ambitious, despite the sales
growth decline trend, was that McDonald's needed growth. The QSR market (fast food chains) was
starting to decline, thus putting considerable pressure on McDonald's. In 1998, QSRs fell 2%
compared to 1997's penetration of people visiting.
The cereal competition woke up
The breakfast cereal market is hugely powerful. Valued at $670m, it was worth protecting. It was
very lucky that the breakfast cereal manufacturers had been unsuccessful with efforts to launch a
breakfast product that could be eaten away from home.

2. In 1998, however, they launched new products with the recognition that people wanted an
alternative they could eat on the run – mostly breakfast bars. They supported those new brands
with a combined media spend of over $6 million. The key players were:
1. Uncle Toby's $1.53m
2. Pop Tarts (for kids) $0.5m plus (exact media spend was not available)
3. Up & Go $3.24m
These breakfast products had the advantage of both being less expensive than McDonald's and in
many cases having the image of being healthier.
No new news
What is particularly important about the situation is that McDonald's had to attract people from
outside their normal category. They already had 88% share of breakfast visits to QSRs. Faced with
the problem of sales stagnation, many retailers would have resorted either to offering a new
product or, more often, offered discounts.
In research groups, people asked why McDonald's couldn't serve more varied food – perhaps
cereal, fruit salad or muffins. It certainly would have made it easier to engage an audience with a
fresh story.
It was decided that for a one–month promotion, a larger than normal size breakfast burger would
be offered–a variation on other 'big fill' offers before, like McOmelette. These kinds of promotional
products had produced sales 'spikes' in the past but did not bring new customers or sustained sales
increases.
The effect of the health message explosion
It's hard to quantify the amount of editorial (TV, newspaper and magazine) devoted to extolling the
virtues of a healthy diet, but Australians were certainly bombarded by it. Stories about the effects
on children who don't get a proper breakfast before school, the effect on productivity, cholesterol,
'junk food', achieving 'balance', salt … the list goes on. What can be measured, however, is the
result it had on the way people view healthy eating.
According to quantitative tracking provided by AMR: Quantum Harris,1 people are increasingly
interested in health issues and many have taken action to change the way they eat as a result. The
need for a 'healthy' breakfast would be a real obstacle to persuading new customers. See Figure 2.
The targets aren't big Maccas fans
The diagram below (Figure 3) is taken from the qualitative research conducted in 1997.2 It shows
how negatively non–users of McBreakfast felt about it.
Not my kind of food
Furthermore, the food that McDonald's offered at breakfast wasn't what these people wanted
either. Among the objections people had was that the food was not healthy/nutritious enough. But
also, for those looking for a treat, it wasn't the right kind of treat. Many times the same person had
both complaints.
THE CAMPAIGN
A combination of qualitative research and DDB's experience and hypothesis led us to a solution
based on real consumer insight.
Instead of trying to keep selling something McDonald's breakfast rejectors had refused to buy for
the past ten years, we found out what they did want to buy and sold them that instead.
They wanted things like sleep, admiration from their kids and time off from their kids! And they
were willing to pay for it.
The strategy had three phases:

3. 1. Focusing on reaching the lowest hanging fruit–targeting the easier
targets
The first change in strategy was to stop thinking about trying to 'make breakfast at McDonald's
appeal to everybody'. Instead, we focused on the people who didn't find McBreakfast appealing and
targeted the easiest among them. We decided on four main targets.
2. Finding the 'problem' or 'barrier' that prevented them from coming to
McBreakfast
We needed to understand their excuse for not going so we could 'bulldoze' those excuses one by
one.
3. Devising an argument that sidestepped the 'barrier'
The following pages show the communication strategy for each target and the TV advertisement
that executed it. There were also radio commercials to reinforce the same message closer to the
time of decision–making.
The key to the strategy was to acknowledge that the next group of people to convert to McDonald's
would come for reasons other than their love of the food and McDonald's ambience.
TVC1: FLATMATES
Target: Young men
Consumer insight: They don't cook and can't be bothered to buy proper breakfast food for home.
Barrier to McBreakfast: It's OK to have McDonald's for lunch, but you need proper breakfast food in
the morning.
Proposition to persuade target: Let us give you a hearty start to the day.
TVC2: BROKEN DREAM
Target: Young working women 18–24
Consumer insight: What they really want in the morning is to press the 'snooze' button again.
Barrier to McBreakfast: They don't like McDonald's. It's not healthy and it's not a real treat either.
Proposition to persuade target: We'll let you have another ten minutes in bed without being late.
'Drive Thru!'
TVC 3: TUBE MAN
Target: Dads (weekend)
Consumer insight: Dads mostly work during the week and by the weekend they feel guilty they
haven't spent time with their kids.
Barrier to McBreakfast: They don't think of McDonald's as fun time with their kids.
Proposition to persuade target: Your kids will think you're a hero if you take them to Maccas for
brekkie.
TVC 4: WEEKEND TEAMS
Target: Targeting mums to encourage dads (weekend)
Consumer insight: By the weekend, Mum's exhausted by the children and needs time to herself or
time for more chores.
Barrier to McBreakfast: They don't love McDonald's food and feel uncomfortable feeding their
children McDonald's too frequently.
Proposition to persuade target: McDonald's saves Mum the hassle of making breakfast on the
weekends.
Neither the media budget nor the strategy changed considerably from previous years. The vast
majority of expenditure was allocated to national television ($7m) and the remainder ($3m) to radio
to remind people to go to McDonald's at breakfast drive time.
THE RESULTS
The sales results exceeded all expectations.

4. Sales increased by a total of $12m across the same stores as the year before.
Please note that all sales and Transaction Count data is on a 'same store' or average store basis.
This ensures that the effect of new store openings is neutralised.
AVERAGE SALES INCREASED
The campaign stopped the decline in same store sales growth. Better still, it reversed the decline.
Average sales per store at breakfast, across all stores, increased by 4.5%: markedly improved from
–1% in 1997 and 0.5% in 1996. Each McDonald's store made, on average, $20,700 more in sales in
1998 than they had in 1997. Figure 4 shows average weekly sales and a polynomial trend line to
show the effect more clearly.
Penetration target met
By June 1998, the target of increasing penetration of breakfast users from 11.8% to 14%3 was
already met (six months ahead of time). The research that provided this information was
discontinued in June 1998, so it was not possible to determine what level was achieved by the end
of the year.
What is available, however, is the number of transactions (orders) to project whether this trend
continued beyond June. By the end of 1998, 1.6 million or 4% more transactions were completed in
the same stores as in the full year of 1997. See Figure 5.
New customer rate increased
The rate of new people visiting grew significantly. Whereas there was around 8% growth per
annum in the number of people who visited for breakfast in 1996 and 1997, a new 11.4% were
attracted in the first half of 1998.4 See Figure 6.
The people invited actually came
A profile of the new people who visited for breakfast shows that in fact more of the people who we
chose to target visited and they also increased the total number of visits (occasions) considerably.
% increase of new users in % increase of new occasions
target group in target group
Young men 18–24 86% 75%
Young women 18–24 15% 55%
Fathers of young children 2% 60%
For example, 15% more young women (aged 18–24) visited than in the same period in 1997. They
also increased their number of occasions to breakfast by 55%.
In summary, by the end of 1998 McDonald's generated $12m more on a same–store basis. By June
1998 82,000 new people came to McDonald's for breakfast, contributing an incremental 260,000
visits.
What caused the growth?
Relationship between advertising recall and behaviour
In 1998, the change in advertising material (the creative execution, not the media) was the most
significant change. Moreover, the people who say they saw the breakfast advertising in 1998 have a
significantly more positive disposition and behaviour towards McDonald's.
The numbers below for people (aged 15+) who recall seeing breakfast advertising are indexed
against those who do not recall seeing the advertising.

5. NOT seen any McDonald's
Seen McDonald's Breakfast
Breakfast advertising
advertising (n=1433)
(n=1087)
Positive predisposition to
124 100
McDonald's
Average number of
McDonald's 133 100
breakfasts in the last week
Source: Dangar Research Quantitative Tracking (September 1998)
Relationship between advertising recall and attitude
The table above demonstrates that the advertising grew new users in both predisposition and
behaviour. However, what preceded this was an important change in attitude.
Seen breakfast advertising NOT seen breakfast
(n=1433) advertising (n=1087)
Have good advertising 81 74
It's become part of my way
32 26
of life
Are getting more popular
52 47
nowadays
Are progressive and really up
64 57
with the times
Has a real family feel to it 63 58
Feel comfortable eating there
53 47
on my own
Those respondents who had seen the advertising were most positive about McDonald's. But,
critically, the two dimensions of 'it's become part of my way of life' and 'feel comfortable eating
there on my own' were higher than other McDonald's users. This is a direct reflection of the
strategy.
Transaction counts increased consistently in 1998
Figure 7 shows the average number of transaction counts (number of orders taken) each week
compared to the corresponding week in the previous year. What is quite clear is that there were
higher transaction counts on almost every week in 1998 than 1997.
A FEW FACTORS NEED TO BE CONSIDERED COMPARING THE WEEKS:
Seasonality
In both years, there are increases during the Easter and Christmas school holidays.
Brand advertising

6. There are extremely high media weights to launch the new brand campaign for McDonald's starting
in January. This may explain the increase in January (pre–breakfast campaign launch).
OTHER EXPLANATORY FACTORS
Number of McDonald's outlets
New stores did open in 1998, 23 of them about halfway through the year. However, the number of
McDonald's stores is now so high (650) that new stores add strain to existing stores to attract the
same number of people. For this reason, the fact that average and same store sales increased was
made even remarkable.
In addition, the new stores that opened were mostly smaller stores (with lower sales). These serve
to lower the average as a rule.
As a result, the increase in sales, transaction counts and penetration cited previously cannot be
attributed to new store openings.
Changes in product
The regular breakfast menu had not changed in ten years. There was one promotional burger as
discussed previously. This was the Massive McMuffin (big breakfast burger) for one month in late
August. Although this promotion was successful, the sales growth started well before the promotion
and as can be seen from the transaction counts v. TARPS chart (below), these promotional weeks
were not as strong as weeks with regular breakfast brand advertising. See Figure 8.
Price
There were no changes to pricing in 1998. Also, the 'Value Meal' had been available and advertised
for many years at the same price of $3.25.
Other promotional activity
In terms of non–advertising promotion, all things were approximately equal.
Public relations
There was no deliberate public relations activity and no substantial editorial about McDonald's
Breakfast.
Local store activity
There may have been some small, ad hoc 'promotional' work done by individual stores, but none
was coordinated on a national or statewide basis. It was no heavier than in previous years.
Promotional offers during the year
There were two special offers in 1998: the Massive McMuffin (already discussed), and a Value Meal
Deal which included a bonus newspaper. Although deemed successful, these did not generate
transactions as high as months which used non–promotional breakfast brand advertising, as seen in
Figure 8.
Other advertising
In 1998, McDonald's launched a new brand theme campaign 'Only McDonald's' to replace 'Mac
Time'–both created by DDB. It is possible that this brand advertising contributed to a stronger
predisposition towards McDonald's, which in turn increased people's motivation to go to breakfast
there. However, it is unlikely to have had such rapid effect.
More visits by the same customers
First, the penetration chart proves that there were actually more people and the number of new
people was higher than in 1996/97. Also, the average number of breakfast visits stayed constant
throughout 1997 and 1998.
McCafe stores

7. McCafe represents such a small part of the overall business (both in sales and number of stores)
that the effect is negligible. Its contribution is less than 0.9% in total and did not grow significantly
in 1998.
GROWTH OF THE WHOLE McDONALD'S BUSINESS
Looking at total same store sales (again excluding new stores) non–breakfast sales increased by
1.5% compared to 1997. Breakfast same store sales, however, grew by 5.2%.
How the advertising worked
The advertising used in the years 1986–1996 was already very effective. It had clearly
communicated the products you could buy at McDonald's at breakfast and had shown it to be an
enjoyable experience. However, that formula had become less effective by 1997 in attracting a
more resistant target audience.
Quite simply, the new campaign stopped pushing what McDonald's serves and how quickly it is
served, and started selling what these reluctant consumers really wanted.
It seduced them into watching the messages by using a hook. That hook was about making their
lives better. Then the solution was revealed to be McDonald's for breakfast.
How effective was the advertising?
Most importantly, the 1998 breakfast campaign was not an exercise in purely getting more
awareness or a change in attitudes. It caused a real behavioural change among Australians–getting
people who had refused to go to McDonald's for breakfast to start going.
McDonald's breakfast sales had traditionally been driven by both new store openings and
advertising. By 1997 they were being driven almost entirely by new store openings, and were again
in 1998. New store openings contributed to increases in
• average sales per store by $20,700;
• penetration of breakfast users from 11.8% to 14%.
So, how can we measure the total effect excluding the new store effect? Rather than inflating the
sales effect by looking at total sales (which will naturally grow with new store openings), when we
use comparative data on the stores that have been open for twelve months, these stores grew their
sales by $12,000,000, triggered by a change in creative strategy. (New store openings if anything
would cannibalise the sales from existing stores.)
1997 1998
Same store breakfast sales $198m $210
Media investment for total
$10.3m $10m
campaign
Sales: Media investment ratio 19.2 21.0
What's more, that increase was generated with no increase in media spend (in fact, slightly less).
The real return on the advertising would be greater than this. This is because the advertising
investment has been fixed and is responsible for generating the base level of sales. With no change
in creative strategy, the advertising would have generated at least $198m. Without this investment
it would have been considerably less. The incremental sales are accounted for by the change in
creative strategy.
CONCLUSION
This is a precedent case for using 'brand advertising' to lift sales in a mature market.

8. Instead of resorting to price discounts and promotions to generate a 'quick hit', which does not
always create enduring sales growth, this case proves that advertising existing products can, in
fact, change behaviour.
The key in this case was a shift in thinking to the way non–customers think. In understanding their
perspective–their preoccupation with making their lives better, not with our products–we could help
solve their problems, thus becoming relevant.
It proves that a change in communication strategy can drive sales to the tune of at least
$12,000,000, in the same stores, even in a mature market.
NOTES & EXHIBITS
FIGURE 1: MCDONALD’S TOTAL BREAKFAST SALES INCREASE DESPITE DECLINING
RATE OF 'SAME STORE' GROWTH
FIGURE 2: PERCENTAGE OF ADULTS WHO CLAIM TO BE ACTIVELY TAKING CARE OF
THEIR HEALTH

9. FIGURE 3: IMAGERY OF MCDONALD'S AT BREAKFAST AMONG NON–USERS
FIGURE 4: AVERAGE SALES AT BREAKFAST 1995–98

10. FIGURE 5: SAME STORE BREAKFAST TRANSACTION COUNTS
FIGURE 6: : PEOPLE WHO HAD BEEN TO MCDONALD'S FOR BREAKFAST IN LAST 4
WEEKS
FIGURE 7: AVERAGE TRANSACTION COUNTS AS BREAKFAST

11. FIGURE 8: TARPs v. AVERAGE TRANSACTION COUNTS