If I were to have guessed the results of a study comparing the loyalty of fast-food customers to their favorite chains, I would have guessed the most loyal would be Dunkin' Donuts coffee lovers. Customers of that chain -- and Northeastern U.S./Canadian restaurant chain Tim Horton's -- are always the most vocal in any post I write discussing the comparative merits of Starbucks, McDonald's, or other chain restaurants.
But based on the way the designers of the CustomersDNA LLC study defined loyalty, I would have been wrong: They call McDonald's coffee lovers the most loyal because they don't "roam" as much.
In other words, if one of the 15,000 study participants identifies one chain -- McDonald's, in this case -- as their "primary source" for coffee, they are less likely to stray from the Golden Arches and end up at a Starbucks or Dunkin' Donuts than the other way around. According to the study, only 29% of McDonald's' loyalists will go elsewhere in a month, compared to 53% of Starbucks' and Dunkin' Donuts' aficionados.Calling out this behavior as key to the quick-serve breakfast wars, CustomersDNA co-founder Dave Jenkins told DowJones, "Getting that customer to come one more time to their restaurant and one less time to their competitor's is how the battle will be won or lost."
Customers weren't asked why they chose their favorite chain or even why they sometimes strayed. Since a number of factors could be at work here, it's hard to say whether the reason they go back again and again is due to loyalty, convenience, financial concerns or social influence.
After all, if a customer is in a hurry on his or her way to work, it's more likely that person will pass a McDonald's drive-thru on the way into work than a Starbucks one. And what if the weather is bad? Or that early morning commuter only has $1 in his or her wallet? Or consider two college sophomores headed to class: If the driver prefers McDonald's' reliable McMuffins over glazed doughnuts and cinnamon rolls, McMuffins it is.
I doubt this survey says much more than the obvious: McDonald's is cheaper, more ubiquitous, and has a wider menu than the other two competitors for morning coffee. Burger King, with an equally interesting menu, similar prices and ubiquity to McDonald's, wasn't included in the study, and their stores now sell Seattle's Best Coffee, a Starbucks brand.
Given another set of circumstances, the survey could have easily come up with an entirely different conclusion. For instance, say there was a situation in which a McDonald's restaurant was located with a Starbucks directly across the street from it. In that case, it would be interesting to see how often customers of one would stray to the other. I would expect the instances of customers of either location stray to the other would be low.
So while the results of this survey certainly offer some interesting information, I'd hesitate to see the results as "proof" of anything but McDonald's low cost and high number of locations -- something Starbucks won't, and Dunkin' Donuts probably can't, imitate.
Investing Like Warren Buffett
Learn from one of the world's best investors.View Course »