happymeal1McDonald’s Happy Meals have been a rite of passage for generations of American kids, with fries, burgers, colorful packaging and a special toy inside. But with the growing public debate about childhood obesity and nutrition, and concern that fast food meals are causing costly health problems like diabetes, many parents have been wondering if a McDonald’s Happy Meal is really such a “happy” thing to serve to their children.

In response to these concerns, McDonald’s recently unveiled its plans for new ingredients to the traditional Happy Meal, with an overall reduction in calories of up to 20% in the most popular Happy Meals. Instead of a full 2.4 ounce portion of French fries, every Happy Meal will now include apple slices and a smaller serving of fries (1.1 ounces). (Kids who choose not to eat fries will get a second helping of apples, instead.) The beverage choices also will now include fat-free chocolate milk and 1% low-fat white milk.

Since McDonald’s is the biggest U.S. fast food company, it tends to be in the spotlight of child nutrition advocates and government regulators. As a recent article in the Wall Street Journal pointed out, pressure on McDonald’s Happy Meals has been building for some time. The city of San Francisco recently banned toys from being included in restaurant kids’ meals, unless those meals included vegetables and fruit. New York City is considering a similar ban.

In May, a group of 550 health professionals and organizations asked McDonald’s to stop marketing “junk food” to children, and even called for mascot Ronald McDonald to be retired, claiming that these marketing techniques – clowns, toys, action figures – were causing kids to unhealthily associate low-nutrition food with “fun.”

So even if this Happy Meal menu change is a good PR move, it is also a sign that McDonald’s is continuing to shift its business operations to stay relevant to what its customers want to buy.

What are some lessons that other businesses can learn from McDonald’s healthier Happy Meal?

  • Adapt to – and where possible, anticipate – changing buyer needs. McDonald’s has been one of the biggest success stories of the Great Recession, as people’s buying habits shifted and families started to look for more out of “fast food.” We’ve written before about how McDonald’s beat Burger King and even started to compete with Starbucks, by appealing to a wider variety of health-conscious customers with premium items like McCafé coffee and fruit smoothies. McDonald’s is also trying to position itself as a healthier fast food chain with a more extensive selection of salads, oatmeal, and snack-size portions of dessert.
  • Prepare to invest in staying relevant to customers. The American fast food business was built on burgers and fries, served in big portions. For years, this was a profitable formula, and there are going to be costs for McDonald’s and other fast food chains as they make the transition to add more fresh fruits and vegetables to their menu. It always costs money to add menu items, change packaging and marketing messaging – especially when you have 14,000 U.S. locations like McDonald’s. McDonald’s food purchase and storage costs will go up, since fresh apple slices are more perishable than frozen French fries. But the writing is on the wall: customers are not going to keep buying the same old unhealthy fast food, even if it is in pretty packaging with a toy inside. (And if recent political trends continue, some local governments might not even allow this food to be served and marketed to kids.)
  • Be proactive. McDonald’s is trying to adapt to a changing political and cultural climate. Rather than be painted as “the bad guy” that is serving unhealthy food to kids, they’re working proactively to show that they are offering more options to families. How quickly can your business react to changing customer preferences? And better yet, how good are you at listening to your customers, “reading the tea leaves” and being prepared for a big shift before it occurs?

The McDonald’s Happy Meal story is another example of how even the biggest players have to constantly adapt their offerings and their operations to stay relevant to changing customer needs. The advantage that most smaller businesses have over a big company like McDonald’s is that they don’t have as much overhead or as many layers of management.

As a smaller business, instead of rolling out a change to 14,000 stores, you can adapt to better serve your customers at the local level. Instead of being targeted for criticism by activists and city councils, your business can do the right thing for your customers without a lot of public scrutiny and unwanted publicity.

Staying relevant to customers is something that every business can feel happy about because relevance is reflected on the balance sheet in the right column.

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