Former fast-food CEO to McDonald’s: Don’t be ‘beige.’

Greg Creed spent 25 years at Yum Brands, including more than a decade in leadership roles at Taco Bell, before he retired from the company in 2020. He offered this unsolicited advice after a rough quarter for McDonald’s, in which same-store sales fell over 3%, the company’s worst drop since the pandemic.

The problem, Creed asserts, is that McDonald’s isn’t chasing menu options that its customers will crave. And without a menu that elicits a strong reaction—either positive or negative—from diners, McDonald’s is just “being beige.” 

“Nothing as a brand is worse than being beige,” Creed wrote in a recent LinkedIn post. “It upsets no one, but let’s be honest: No one loves beige.” 

In the company’s first-quarter earnings report, McDonald’s CEO Chris Kempczinski cited uncertain economic and geopolitical conditions as reasons for the sales slump. Traffic to McDonald’s fell more than expected, even as the company leaned into its value messaging. Still, McDonald’s has raised prices as inflation persists.

“We’re not immune to the volatility in the industry or the pressures that our consumers are facing,” Kempczinski said.

Comparatively, though, Taco Bell is killing it. In the first three months of the year, sales are up 9%. Traffic is up too, regardless of customer income. These numbers were a bright spot for Yum Brands, also the parent company of KFC and Pizza Hut, which reported mixed results in the first quarter.

“I know this is a tough operating environment for everybody else in the industry,” Yum Brands CEO David Gibbs said during his company’s recent earnings call. “It just is probably an environment that favors Taco Bell, and that’s what you’re seeing there, firing on all cylinders.”

From his position on the outside, Creed can only speculate on what’s happening. But his hunch is Taco Bell’s success comes from its willingness to aggressively push new menu items, like its crispy chicken nuggets, a former limited-time offering that just made it onto the menu for good. It’s not that McDonald’s can’t innovate, Creed says, it’s that the company’s structure—where he guesses operators have more input on menu items than the marketing department—is slowing it down. 

“I always thought of McDonalds as an operating company,” Creed said via email. “Whereas I used to say when I ran Taco Bell, that we are a marketing company that just happens to sell Mexican-inspired food.” 

Process aside, Kempczinski expects McDonald’s fortune to turn. Like Taco Bell, it’s adding more fried chicken to the menu with this week’s nationwide launch of fried chicken tenders called McCrispy Strips, and plans to lean hard on its value offerings to reach a stretched consumer. 

The biggest co-sign of Creed’s analysis, though, comes from current Taco Bell CEO Sean Tresvant. In response to Creed’s LinkedIn screed, he wrote: 

“Nuggets (pun intended) of gold, Greg.” 

View the full article