Never Mind Market Research, Just Pay Attention & Follow The Leader
 by Stephen Mahaney

Nevermind Market Research, Just Pay Attention & Follow The Leader — by Stephen Mahaney

As Follow the leader the story goes, Dave Thomas, founder of Wendy's, couldn't afford to do the market research that McDonalds could do.

You may have heard that, once McDonald's "founder" Ray Kroc finally figured out that he was in the Real Estate business, not actually the "hamburger" business, he started getting rich. REALLY rich!

You see, there was a time when McDonald's was having trouble keeping their franchisees in line. These unruly franchisees kept adding and subtracting items from the McDonalds menus much to the chagrin of Kroc who insisted that all McDonald's restaurants offer the same exact menus in restaurants that look pretty much exactly like each other.

But when the franchisee's violated that mandate or changed the design of the building, Kroc had no leverage to bring them back into compliance — until he started owning the ground under the restaurant.

By leasing the location, the actual real estate, to his franchisees he could force compliance with McDonald's standards as a condition of the lease. This gave Kroc the leverage he needed. The franchisees either complied or else they faced losing their lease.

That's how Ray Kroc almost accidentally figured out, he was in the real estate business. Owning the land under the restaurant was key.

But this also meant that Kroc had to figure out what locations were best. And that took research, which costs money.

When Wendy's Dave Thomas decided he wanted to compete with McDonald's, but didn't have the money to research the best locations, he did the simplest thing possible...

He followed McDonalds.

By figuring out that, since McDonalds had already done the research to determine the best locations for a fast food restaurant, all he h...