Menu proliferation can lead to identity crisisMenu proliferation can lead to identity crisis

In 2007 McDonald’s had 85 items on its menu. Today, it has 145. That represents an increase of 70.6 percent.

Taco Bell plans to double its annual domestic sales by 2021. And how is the brand planning to do that? According to analysts who attended an investor meeting, the majority of the increase will come from “more menu items and more dayparts.”

In addition to line extensions on Taco Bell’s main menu, a new breakfast lineup will roll out systemwide by 2014, including breakfast burritos, bite-size Cinnabon Delights, oatmeal, yogurt parfaits and coffee.

Meanwhile, Wendy’s is debuting its Pretzel Bacon Cheeseburger, presumably at a premium price. Wendy’s also is going downscale with a Right Price Right Size menu consisting of 15 different items.

Many chains are rushing to expand their menus in one of four areas: upscale, downscale, healthful and low calorie — and preferably all four at the same time.

In my opinion, the two biggest restaurant issues are menu and marketing. But with all of the menu proliferation taking place, the two are converging. Increasingly, restaurant advertising focuses on nothing but the new additions to a chain’s menu. Menu proliferation is the marketing strategy.

Consumers are getting confused. It becomes harder and harder to remember which chain offers which fabulous new food item. Unless you’re a regular customer of one of the chains, you are likely to ignore the avalanche of new offerings that arrive each month.

The biggest opportunity in restaurant marketing is creating an identity for a chain — an identity that encompasses the totality of the menu, of course, but does it in a way that’s memorable.

Few chains measure up to that standard.

A fragmented business

One might think a chain like McDonald’s dominates the restaurant industry, but it doesn’t. With 2011 sales of $34.2 billion, McDonald’s accounted for only 5.8 percent of estimated restaurant sales of $592 billion that year.

The top five chains in terms of U.S. sales — McDonald’s, Subway, Starbucks, Burger King and Wendy’s — accounted for only 11.9 percent of the total.

Compare the restaurant business to almost every other industry. The top five automotive brands — Ford, Chevrolet, Toyota, Honda and Nissan — account for 56 percent of automotive sales.

The top five personal computer brands — Hewlett-Packard, Dell, Apple, Lenovo and Acer — account for 74 percent of PC sales.

The top five smartphone brands — Apple, Samsung, HTC, Motorola and LG — account for 79 percent of smartphone sales.

The diner's disappearing act

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Years ago, diners dominated the domestic marketplace. Every small town in America had one or two that served everything.

It made sense. It’s the law of the inverse: A restaurant’s menu should be the inverse of the number of competitors in its marketplace.

When a restaurant has few competitors, it should have a broad menu. When a restaurant has many competitors, it should have a much narrower menu.

As America became urbanized, many of the diners disappeared. Why? Because when the number of competitors increased, the diners should have reacted by narrowing their menus. In other words, they should have become specialists rather than generalists.

But nothing is harder in marketing than narrowing a restaurant’s menu. You can hear the protests now: “Wait, you can’t do that!” or “We’ll never come back again because you dropped our favorite item!”

Points of differentiation

Sixteen years ago, when I moved from New York to Atlanta, the metropolitan area had a population of 3.5 million. Today, metropolitan Atlanta has a population of 5.5 million.

Along with a population increase of 57.1 percent, I’m sure the number of restaurants also increased substantially. Based on the law of the inverse, existing restaurants should have been narrowing their menus as competition grew. But that’s not what happened. There seems to be an unwritten law that forbids the practice.

Some of the weaker restaurants folded, and many newer, more focused restaurants opened — restaurants featuring better burgers, frozen yogurt, specialty pizzas, ethnic specialties, even combination movie-and-dinner restaurants.

If you want to open a restaurant chain that has a good chance for a long life, you need to open one with a unique identity. It could be a quick-service restaurant focused on healthful foods, like LYFE Kitchen, founded by a team of former McDonald’s veterans.

Or it could be a chain focused on high-end and low-calorie food, like Darden Restaurants Inc.’s Seasons 52, which offers no menu item that weighs in at more than 475 calories.

Or it could be a chain focused on ethic food other than the big four: Chinese, Italian, Mexican and French.

Loss of identity

The net result of all this menu proliferation is loss of identity. McDonald’s used to be a hamburger chain. What is McDonald’s today? Who knows?

McDonald’s is following a well-known  but risky pattern. Start with a unique identity and then keep adding things until you lose that identity and sales stagnate.

Take Chevrolet. In 1962 Chevrolet was the dominant automobile brand in the United States. It sold 2.4 million vehicles, accounting for 31 percent of the domestic automobile market.

Chevrolet had a unique identity. It was the best-selling “entry-level” car on the market.

So what did Chevrolet do next? Product proliferation. Today, Chevrolet sells 18 different models, from inexpensive sedans like the Aveo to expensive sports cars like the Corvette.

But today, Chevrolet no longer is the dominant automobile brand. Ford is. And Chevrolet’s market share is no longer 31 percent. It’s 13 percent. Chevrolet has lost its identity.

Ford is the dominant truck brand, outselling Chevrolet trucks by 42 percent. And Toyota is the dominant car brand, outselling Chevrolet cars by 24 percent.

What’s a Chevrolet? It’s a large, small, cheap, expensive, car or truck.

Menu proliferation is like product proliferation. It may work in the short term, but never in the long term.  

Laura Ries is president of Ries & Ries, a marketing consulting firm located in Atlanta. Her e-mail address: [email protected].