McDonald’s Marketing Strategy, Why it's Travis Scott Collab Worked
How do you wake a sleeping giant? You hire Travis Scott. McDonald’s sales have been in decline since 2013. With fast food chains like Chick-fil-A hot on McDonald’s tail it had to do something different or risk becoming irrelevant. It’s solution was to have rapper Travis Scott back a menu item, something the restaurant chain hadn’t done in 30 years. While there was opposition from within McDonald’s to work with Scott the promotion, which ran for a month in September, was so successful McDonald’s ran out of ingredients.
The last time in recent memory a promotion or new menu item was this successful it created shortages was when Popeye’s launched its new chicken sandwich last year. The supply of that sandwich ran out in two weeks, McDonald’s faced an ingredient shortage from selling Scott’s meal within eight days of launch.
McDonald’s sales were up 4.6% in its most recent quarter (which include sales from Scott’s promotion) after being down 8.7% in the second quarter. The marketing promotion helped McDonald’s to achieve its best monthly sales in nearly 10 years in the United States despite ongoing restrictions due to COVID-19. Posts made about Scott on McDonald’s Instagram page also generated five times as much the normal engagement. It’s clear that the promotion worked but why? Not all celebrity endorsements go viral but this one did. Authenticity as well as a focus on diversity are some of the factors that lead to the success of this launch.
1. It was authentic
We live in a time where everyone talks about being authentic. But if you scroll through your Instagram feed much of what you see doesn’t feel authentic at all. Is your favourite Instagrammer really that perfect? Are they always eating a breakfast dish that looks like it could grace the pages of House & Home magazine? Amidst a sea sponsored content on social media it’s getting harder to tell what’s real and what’s not.
When McDonald’s entered into a partnership with Scott they decided to release a limited edition of Scott’s favourite meal, a Quarter Pounder with cheese, fries with barbecue sauce and a Sprite. Sounds pretty basic doesn’t it? It doesn’t even have any special ingredients. But that level of simplicity made the campaign seem real. Scott grew up in Houston eating that very meal at McDonald’s. Long before the partnership he talked about his love for McDonald’s and posted about it on social media. If I am a Travis Scott fan I am going to believe that’s what he ate growing up because it’s actually believable that he would eat something that actually exists.
“Travis is a true McDonald’s fan having grown up visiting our restaurants in Houston, not to mention one of the biggest musical acts and cultural icons in the world,” said Morgan Flatley, McDonald’s US Chief Marketing Officer.
The meal was so popular McDonald’s ran out of its ingredients within 8 days after launch. Now why would Gen Z storm McDonald’s to get a meal that already exists, something they could buy anytime? Consumers, especially younger consumers are obsessed with celebrity culture. People like the idea of having a taste of the lifestyle of those they seek to emulate. How many times has a celebrity skin care or workout routine gone viral on YouTube when it really isn’t that different than what many do already. You can almost see someone buying the Travis Scott meal and thinking…so this is what he likes? This is kind of what it’s like to be like him? This meal tastes pretty good to me, I might buy it again next time.
When it comes to authenticity McDonald’s nailed this one on the head by choosing to collaborate with a celebrity who is already a known fan. Those types of collaborations always work better than the YouTuber who is raving about a new skincare product after using it for only two weeks.
2. It capitalized on our fear of missing out
Hundreds of millions of dollars of merchandise have moved because consumers have a fear of missing out. Brands like Supreme and Adidas are masterminds in creating hype with limited merchandise drops. Beyonce’s recent drop of IVY Park merchandise sold out in seconds as have many of Kanye West’s drops of Yeezy merchandise. Speaking about creating hype around Kanye West’s merchandise, Adidas CEO Kasper Rørsted said: “as we’re moving new Yeezy products into the market, we will do what we’ve done also in the past: create scarcity around the new products we are launching, make sure we have the hype, and, over a given period of time of course, drive volume into that market.”
The Travis Scott promotion was no different, it was a limited time offering only available for one month. Limited time offerings work because they create a sense of urgency. You don’t have forever to try Scott’s meal at McDonald’s, you have to try it before it’s gone prompting you to eat at McDonald’s. While a limited time opportunity may seem like the oldest trick in the book it works.
3. A focus on diversity and inclusion
While popular, McDonald’s is not the most culturally relevant brand and that’s a problem. McDonald’s sales have declined since 2013 when it made $28 billion. Fast forward to 2019 and McDonald’s revenues were down to $21 billion. Declining growth is not something any company wants to have even if you are a multi-billion dollar retailer like McDonald’s.
When the Travis Scott partnership with McDonald’s was announced many of McDonald’s franchisees were opposed to it. In a survey of McDonald’s National Operators Association 65% of operators surveyed were against the partnership. One of the primary reasons cited was that Scott’s lyrics are explicit and not reflective of a family friendly brand. Comments like that are steeped in racist undertones. The irony of those types of statements is that it is McDonald’s very own customers who are the ones listening to Scott’s music. Scott has sold over 45 million records in the United States many of which are sold to generation Z and millennials. No one sells that volume of records without appealing to people from different demographics. As the New York Times writes: “despite hip-hop’s complete dominance of pop culture, there is still a bit of a lag when it comes to the willingness of large mainstream brands to work with hip-hop stars.”
For franchisees to have that sentiment it means there is a fundamental lack of understanding of their own customer base as well as a lack of courage to try something new. Businesses that are not inclusive in their products or marketing messages are leaving money on the table. Take Fenty Beauty. The brand made 500 million euros in its first year on the back of a completely inclusive line of foundation. Fenty Beauty’s partner, LVMH, benefited enormously from its partnership with Rihanna. The success of McDonald’s Travis Scott partnership is a wakeup call to its own franchisees as well as the broader retail industry.
Approximately 48% of generation Z in the United States is nonwhite making this generation the most racially and ethnically diverse generation in American history. 25% of generation Z in the United States are Hispanic, 14% are African American and 6% are Asian. Focusing on diversity and inculcation isn’t just right it makes good business sense.
Considerable buying power exists within the hands of people of colour. Buying power within the Hispanic community is expected to reach $1.9 billion by 2023. The communities where buying power has grown the fastest over the past two decades belongs to Multi-Racial and Asian Americans whose buying power has grown by 389.7% and 382.3% respectively. The group with the lowest growth rate is White Americans who saw their buying power grow by 116.7% over the same time period.
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There is power in numbers. Now and in the future. There are now 125 million minorities in the United States representing 40% of the United States population. By 2045 today’s minority populations will be the majority. Your consumers are voting for change, it’s time to be more inclusive or risk being left behind.
4. It was a “risky” bet
Partnering with Scott wasn’t actually a risk, ask generation Z. But to McDonald’s it was a departure from doing things the way it used to. Taking risks isn’t easy. It’s hard to change. Risk taking often becomes harder the longer a company is around. The thinking often goes, well if I am a multi-billion dollar company do I really need to change? But the most successful companies realize that change has to be in their DNA for continued success. Take a look at Apple and its move into services. In 2016 something happened that frightened investors, the iPhone experienced its first ever decline in sales. Instead of only doubling down on what had made Apple successful in the past, in early 2017 Apple’s CEO Tim Cook made a goal to double Apple’s Service’s revenues within four years. By 2019 services generated 18% of Apple’s revenue.
McDonald’s hadn’t named a celebrity after a menu item in 30 years with after it did so with Michael Jordan. Its partnership with Scott must have felt risky but McDonald’s did it anyways. Now it has a roadmap for other marketing campaigns. If you are struggling to take your brand to the next level why not try something you have never done before? The irony is that when a company starts out it often takes many risks because that’s what’s necessary to figure out the best path forward. But over time that same level of risk taking feels rather, risky. But if you look at a company like Amazon that now derives a significant amount of its profits from cloud computing you will see that risk taking is not just a nice to have but a core part of what’s necessary to reach your next level of growth.