Family Album

A Quarter Pounder or a Grande Latte?
By: Mike Bolen

You might ask, what the heck does that have to do with McCarthy — beyond the obvious fact that most of us have perhaps chosen one or both on any given day. Strange as it seems, I believe it has a lot to do with us. It's a tale of two very different companies, McDonald's and Starbucks. Stay with me here.

Once upon a time, McDonald's was the prototypical American icon — serving billions upon billions of hamburgers and doing it in a clean, friendly and value-packed way… a way that created an undeniably strong relationship with America's parents and kids. While it was building that incredible franchise, it was the darling of Wall Street for decades, and its stock was a key holding of millions of us (me included).

What could possibly go wrong? It turns out plenty. Their success brought dozens of competitors into the fray — and guess what McDonald's did in response? The most obvious thing. They tried to compete solely on price. Then they diluted their franchise by offering every imaginable food combination — I'm shocked they haven't come out with ostrich burgers. Anybody care for a McRib? It's as if they completely abandoned the notion of customer service. And they forgot how to clean their restaurants (their bathrooms were worse). In a nutshell, they forgot what had made them successful. They lost their focus.

Anybody remember what happened as a result? You and I and millions like us punished McDonald's. Sales went down the tubes. Profits nosedived. Their customer service rankings ran into the ditch. They became easy targets for Leno, Letterman, and Oprah. And they deserved it. Every last little bit of it. Add to it the fact that the old darling of Wall Street became its latest bust — and has pretty much stayed that way. When was the last time anyone called you up and said they had a hot stock tip — buy McDonald's?

I'm not quite done with Mickey D's. One last question for you. What does McDonald's stand for in your mind these days? What's its brand proposition? If you're like me, it's muddled at best, lousy at worst and distinctly un-unique. Where's the beef?

Now let's talk about coffee. What could be easier to make and market than a simple cup of joe? When Starbucks was created back in 1971, a cup of coffee was a cup of coffee — care for some Folgers? Every office in America had their own fancy Bunn-o-matic. And it was all pretty much crap. But it was the only kind of crap that generations of us knew. If it was hot we accepted it. Then along came Starbucks. And before you could say Juan Valdez, every street corner, every airport, every tiny little nook and cranny on the planet it seems, had the glorious smell of cappuccino wafting into the air. Did you know that there are 87 (yes, 87!) Starbucks in downtown San Francisco? Some are almost right next to each other. And you know what they all have in common? They're packed with people who are willing — even eager — to hand over $4 for a cup of latte (a cup of coffee, by the way, that costs about 15 cents to make — now that's not a bad profit margin). And that constant crowd of people are all smiling, talking and having a good time — when was the last time you saw that kind of positive energy in a McDonald's?

So how did Starbucks do it? How did those people go from one tiny little storefront in Seattle's Pike Place Market to more than 10,000 locations in 36 countries across the globe in 30 years? It's a one-word answer — and hopefully you know what it is.

Focus. Though Starbucks over the years has added wi-fi, sold music and every conceivable kind of hot and cold coffee or tea drink, they have NEVER lost focus on who they are and what they deliver to their customers. Starbucks delivers a genuine customer experience… a warm, friendly, relaxed experience that says “this is a community, this is your little haven from the rest of the harried world.” If you think about it, the coffee could almost be incidental to the Starbucks experience, but it's not. It's consistently excellent, and they've done a remarkable job of differentiating a simple commodity like a coffee bean — who knew or cared that there are more than 80 different kinds.

And talk about service. I've been to Starbucks in literally every far corner of this country, and it's amazing to me how uniformly friendly and cordial every Starbucks person is. Smiles abound — and those smiles are like rabbits — they multiply. Compare those smiles and that atmosphere with your last experience at McDonald's — are you starting to get the picture?

And guess what the result is? Sales are straight up. So are profits. And their stock hasn't done too badly in the last ten years. How does a 33% average shareholder return sound?

So… the question remains — what does this have to do with McCarthy? We're at a crossroads at McCarthy. We're growing fast — and with that pace of growth we risk losing that edge that's made us successful.

I believe what's made us successful is our complete focus on being a close-knit community (call it a family) of premier builders who are utterly passionate about delivering to our clients not only a great product, but also a piece of their heart, body and soul. In return, we ask that they pay us appropriately for the value produced by that passion and excellence. It's a simple proposition — but it's one that could easily be diluted if each and every one of us is not focused on insuring that we deliver on that promise each day.

Each and every day, let's guard “the McCarthy experience” — let's guard our brand proposition. Each of us has a responsibility to protect it. I'd like to think that McCarthy can be the Starbucks of the construction world. Take your pick of who the McDonald's of our industry might be.