I'm the original author of this. And just to clarify a few points:

1. This really happened. 2. It was done on purpose by the owner. 3. They did normally close one day per year for repaving/repairs...and Wendy's did announce their grand opening well in advance.

Thanks,

Andy Swan

OP infers that McDonald's intended for Wendy's to fail on their first day. Based upon my experience in foodservice (including 7 years with McDonald's), I don't believe it. They never conducted business that way, and I doubt that they do now.

Years of study have taught something counter-intuitive in the fast food industry (especially in a small town where everybody knows everybody else): the better Wendy's does, the better McDonald's does. With more choices downtown, there will be more traffic.

The best food service organizations welcome others, not as competitors to fight over a bigger piece of pie, but as "partners" to make the whole pie bigger.

It's up to us to figure out how this lesson applies to our industry. There's probably a symbiotic relationship out there for us to find as well.

McD's is a franchise, so why can't this simply be the action of one rogue franchise owner?

It's a ballsy move, since a whole day of lost sales is a pretty serious thing for a McDonald's store. The margins are pretty slim.

I worked for them once. We had a kitchen fire while preparing the store to open, about 5am. McDonald's brought in a crash team of people that worked with the fire department, insurance adjusters, cleanup workers, and health inspectors to get that store back into shape to open...at 7pm THAT NIGHT. On a SUNDAY. That's how serious lost business is.

It says they shut down to re-pave the parking lot. Sounds like something that has to be done every once in a while. Might be that the rouge franchise-taker just scheduled the re-pavement "conveniently".

Perhaps they just figured that most people would check out the new Wendy on it's opening day anyway, so they'd lose less business on that day than on any other day. That it ended up destroying the competition (if it did) could have been sheer luck.

Oh, I'm not doubting that at all. It's ballsy, but very very smart.

I have a general rule not to visit a new restaurant for the first two weeks because of this exact same "meltdown" scenario.

It could be, but I still doubt it. McDonald's runs a very tight ship; franchisees have little latitude to go "rogue". It's highly unlikely that a franchisee could shut down one day without corporate approval. They have traditionally welcomed others into their neighborhoods (while still maintaining #1 position, of course).

[Little known unpublished McDonald's fact: Not sure if it's still true, but at one time they honored all competitors coupons. Yes, they'd give you a free Big Mac with a free Whopper coupon.]

They may have kept the restaurant open and just closed the drive-thru lane. That's pretty much killing your lunch business, but the store is still effectively "open".

[And yeah the coupon thing is still there. I once spent half an hour arguing with a woman who knew about this fact and was trying to convince me a free Strawberry Shake was equivalent to a free Slurpee coupon she was holding. Had to say no to that one.]

Maybe if they were planning that pavement replacement anyway ... they could adjust so that it would fall on the certain date - the date of Wendy's opening.

Wouldn't you agree that the web's current ecosystem-via-API nature is a good example of this?

For similar services sure, or services which rely on others even if they aren't similar. BK went down and all of a sudden Twitter's throwing 503's. Coincidence, or strain on backend resources from users fleeing to their back-up social network?

Definitely. The more people who get used to using applications that are online-only and who get used to having their data on other people's servers rather than on their hard drive or a USB stick, the more demand there will be for everyone else providing web applications.

Plus the demand for broadband and hardware goes up every time something new and useful appears, as some group of people buys or upgrades so they can use the new service (e.g. buying netbooks so more of the family can use facebook at once without buying full PCs; or upgrading to better broadband for youtube).

The growing availability of APIs enabling functionality without reinventing the wheel is very important as well.

Yes, cute story but I don't believe it was intentionally done for that reason. I've met my share of fast food managers and I can say that none of them would have been smart enough to envision such a thing. That leaves the franchisee since McDs, the corporation, is not going to be that involved. Was the franchisee that smart? Maybe - you have to have a lot going for you before McDs will hand you the keys. But I doubt it - more likely it is just coincidence. But hey - lots of great life lessons come from coincidence, right?

I've met and worked with fast food managers who are plenty smart. And some who aren't. Just like the software developers I've met and worked with.

You are right, in fact a game theory prof I heard lecture brought this very example up.

Not the intended point, but it reminds me of the good side of living in Italy. I just got back from lunch at a nice trattoria, where I had a plate of fusilli with "speck" (like prosciutto), cream, and rucola (I think it's argula or something like that in English) for less than 5 euros. There's a time and a place for McDonalds, but every day at lunch is way too much.

Rucola = arugula in the US, rocket in the UK. Mmm.

So if a competitor site is launching, shut down your site for the day and redirect all traffic to their site in an attempt to flood their server? Interesting tactic but I don't think it's gona work somehow.

Think of the potentially cool sites that were ruined by a poor launch day performance. The Google/Monopoly mashup of a few months ago is the best example I can think of recently. They launched, the servers crashed and burned from the load, and by the time they were fully operational (almost a week), no one was interested any more.

You would have to know your competition is going to be launched with a bare-bones setup, or at least that they have a considerably lower estimate of their launch users than you do. At that point, make sure your users know about the competition, and go down right when it launches. No guarantee it will work, and if they manage to weather the beating from increased users you will probably lose quite a few, but there is the potential...

Forget redirecting traffic - just put an invisible pixel on your site that hits the competitor. Imagine if google did this... they could kill any site!

Yes; we should all DOS the competition. Brilliant plan.

The two things I would learn from this story are: 1) to be prepared for the success. As someone said, be prepared for the time when all your ten thousand customers tell their, maybe, thirty friends about how good is your service. 2) Find always the good side of bad things. For example a competitor can simply emphasize your strong points and (as you said here) increase the market as a whole.

I guess this is why we like this story even if we do not really believe it.

I don't know - it could backfire as well. Sometimes long lines in a new place could give the impression that place is better, especially for people not in line - people just driving through downtown. So, it might be an experiment worth trying, but by no means guarantees success.

That would only apply to a highly competitive market. In this case, you have one store with a long history of customer satisfaction.