Trung Phan Profile picture
Mar 4 13 tweets 6 min read Read on X
Wendy's pricing snafu is a reminder of how hard these fast food chains try to optimize menu design.

McDonald's — which sells to ~1% of the world every day — did a digital menu redesign a few years ago and it boosted sales.

Here are 6 design psychology choices it made: Image
Background: In the mid-2010s, McDonald's sales were lagging. The brand turned it around with help of a multi-year menu & store redesign that:

◻️emphasized simplicity (sped up avg. drive thru time from 400 secs to 350 secs)
◻️highlights signature items (pricier = higher margins) Image
Here was McDonald's challenge: loyal customers love the classics (Big Mac, McChicken)

And spend only 30 secs on the menu (pushing them from defaults to a new items is hard)

But McDonald's sells 2B+ meals a month, so influencing choices for a small % of customers boosts profits. Image
Attention cues

Dynamic menus were the biggest change. While value items are typically static pics, signature items are animated.

Our peripheral vision specializes in detecting motion. Dynamic signature items capture our attention and can end up in our potential choice set.
Decision anchoring

First options are key in decision-making. In a study of buffets, 70% of eaters put one of the first 3 items on the plate.

Signature items are often the 1st thing you see. By highlighting them, they are pushing the higher-margin items into your choice set. Image
Optimized for working memory

Cognitively, humans can hold 5-9 "items" in our working memory at one time (e.g., 7-digit phone numbers).

McDonald's dynamic menus highlight 7-10 items. Naturally, the majority of the menu real estate emphasizes higher-margin items or combos. Image
Price anchoring

Even if *none* of the signature item nudges work, we've been exposed to the priciest items on McDonald's menu.

A subsequent purchase from regular (or value) menu will seem like more of a deal based on the price difference...leading to the perception of value. Image
The power of grouping images

Gestalt principles describe how humans perceive objects and one of them is pattern matching.

McDonald's often groups 3 similar images together of a single product category (usually Signatures) to create a "pattern" that captures our attention. Image
Experience chunking

Inside the restaurant, McDonald's separated the order and waiting lines.

The key here is that our perception of "waiting" is reduced vs. if it was a single line. Thus, our memory of the experience is that the wait "wasn't too long". Image
Sources

Key menu redesign analysis here:

McDonald’s drive-thru news:

Buffet study via The Hustle:

Here’s a 60-second video case study: behavioraleconomics.com/loving-psychol…
cnn.com/2020/11/11/bus…
thehustle.co/the-economics-…

I tried to apply the same design philosophy to the research app.

But my co-founder yelled at me for spending $78,000 on a used McDonald’s drive-thru screen and asked “dude, wtf do we need that for?” (Fair point)Bearly.AI
Semi-related: a lot of fast food logos have the color red in them. Some research — which I have no idea if it’s true — suggests sight of the color can raise blood pressure and stimulate appetites: ion.uwinnipeg.ca/~ssingh5/x/col…
Image
Regarding Wendy’s:

— Said in earnings it wanted to do “dynamic menu”
— This was interpreted as “surge pricing”
— Messaging was meant to be dynamic = discounts and deals
— Got accused of price gouging and exploiting customers
— Walked back the proposal
— So much meme fodder

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More from @TrungTPhan

May 20
Details from Red Lobster’s bankruptcy filing are wild and so much mismanagement:

▫️$1B in debt, $30m in cash
▫️Previous PE owner sold land and leased it back to Red Lobster at “above market rates”
▫️$20 Endless Shrimp cost it $11m but the interesting part is that one of the chain’s owners is Thai seafood firm Thai Union (which also owns Chicken By The Sea) and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America
▫️Thai Union became the only Red Lobster shrimp vendor, overcharging for shrimp and skipping quality reviews (Thai Union has written off its $500m+ investment)
▫️Red Lobster has had 5 CEO in the last 5 years (!!!)
▫️Sales down 30% since 2019

Link: document.epiq11.com/document/getdo…Image
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Red Lobster needed Yukitaka Yamaguchi — aka Japan’s Tuna King (sleeps 3 hours a day and knows where any fish is from on a single bite) — to run quality control.

This dude would not have put up with low-quality seafood slop. readtrung.com/p/becoming-the…
Also, never forget Beyoncé name dropped Red Lobster with some R-rated verses in 2016 (“Formation”) and Red Lobster social responded and there was actually a brief sales surge.


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Read 6 tweets
Apr 4
Steve Cohen’s setup includes renting a 2nd hotel room when he travels so his team can re-build a replica of his 12-monitor work station for him in it. Image
From the book Black Edge:

And here are some details from a former SAC employee: amazon.ca/Black-Edge-Ins…
observer.com/2017/02/sac-ca…
Image
I also have a 12-monitor setup to help research app customers reset their passwords.Bearly.AI
Read 4 tweets
Apr 3
Francis Ford Coppola’s new film “Megalopolis” cost $120m and he self-financed it (including money from selling his winery). 

Coppola is a legend of “going all in” and “putting skin in the game”. 

The GOAT example is “Apocalypse Now”, his classic 1979 war film with arguably the most insane production story ever. 

Let’s rewind to 1975, the year Copolla turned 36: he is on top of Hollywood after directing “The Godfather” (1972) and “The Godfather II” (1974). 

What does Coppola choose to do next? Make a film about the Vietnam War. The script was based on Joseph Conrad’s “Heart of Darkness”, the 1889 novel about the horrors of colonialism in the Belgian Congo.

The major studios all said “no” to Coppola’s pitch for three major reasons:

1️⃣ He wanted full creative control
2️⃣ He wanted to own all of the film rights
3️⃣ The Fall of Saigon happened in April 1975 and the American audience wasn’t exactly asking for a Vietnam War film (the studios wanted Coppola to make another Mafia flick)

Coppola was undeterred and made a huge bet.

“The Godfather II” cost $14m and the director estimated that “Apocalypse Now” would be the same budget. 

He put up $7m (mostly from those sweet Godfather checks) and raised another $7m from United Artists (which bought domestic distribution rights for ~7 years). 

But the project was a disaster from the start. 

Filming started in The Philippines in March 1976 and was supposed to last 3-4 months…it would take 16 months: 

▫️Harvey Keitel was the initial lead but Coppola fired him after one week.

▫️Martin Sheen (Captain Willard) took the lead role but drank so much on set that he gave himself a stress-induced heart attack and almost died. 

▫️Dennis Hopper was doing 3g of coke and 20+ drinks a day while on set (him and Marlon Brandon also hated each other).

▫️A typhoon destroyed 80% of the set and delayed filming for 2-3 months. 

▫️Actual dead bodies — stolen from a local grave — were used on set and the Filipino government and its strongman leader Ferdinand Marcos threatened to shut down production after finding out. 

▫️Marlon Brando (Col. Kurtz) demanded a huge fee ($3m+ for 3 weeks of work and 10% of the film’s gross). He then showed up late, asked for rewrites, declined to read Conrad’s book and was so overweight that the costumes wouldn’t fit (to obscure his heft, Copolla filmed Brando in the shadows and had him wear oversized dark clothing).

The budget ballooned to over $30m.

To maintain creative control and maintain all the film rights, Coppola mortgaged his home and borrowed money against his ownership in The Godfather. 

After the success of “Star Wars” (1977), Coppola even asked his friend and business partner George Lucas — who was originally tapped to direct Apocalypse — for some funds.

I repeat: Coppola went ALL THE WAY IN and had SKIN IN THE GAME.

His wife Eleanor took recorded video of all the insanity and the footage was turned into a 1991 documentary (“Hearts of Darkness: A Filmmaker's Apocalypse”).

The total cost for the film — including marketing spend — reached $45m.

Against all odds, Coppola finished the project and the film was released in August 1979. It grossed $105m and Coppola would make a fortune on future DVD, Home Video and other ancillary revenue streams (below is a trailer for a re-mastered cut from 2019).

During the Cannes Festival in May 1979, Coppola famously said of the film: “The way we made it was very much like the way the Americans were in Vietnam. We were in the jungle, there were too many of us, we had access to too much money, too much equipment, and little by little, we went insane.”
Coppola also said at Cannes that “My movie is not *about* Vietnam. My movie *is* Vietnam”.

It’s def one of the best films ever but that is … a stretch of a comparison.

Anyways, the making of The Godfather was also insane and I wrote about that here: readtrung.com/p/the-godfathe…
If you want more on Apocalypse Now, I went on Jim O'Shaughnessy’s “Infinite Loops” podcast with Rob Henderson to talk about the making and psychology of the film. open.spotify.com/episode/38OYIn…
Read 4 tweets
Mar 10
When Iron Man came out in 2008, Robert Downey Jr. was *not* a marquee star.

He was rebuilding his career and paid a below market rate of $500k.

But the deal terms set him up for one of the great acting comebacks ever (while earnings $450m+ as Tony Stark).

Here’s the story 🧵
Image
The Marvel Cinematic Universe (MCU) we know today was a long shot in the early 2000s.

Marvel was a public co. coming off bankruptcy in 1996 and had sold rights to its best IP (Spiderman, X-Men, Fantastic 4)

From 2000-07, films based on the IP minted cash but Marvel made little: Image
In the early-90s, Downey Jr. was one of the brightest young stars in Hollywood, receiving a Best Actor nomination for "Charlie Chaplin" in 1992 (@ 27yrs old).

In the 2nd half of the decade, though, he dealt with drug addiction, arrests and jail stints before going clean in 2003. Image
Read 20 tweets
Feb 13
Masayoshi Son does the craziest investment swings:

▫️In mid-90s: invested $1.7B into 100+ internet firms (including a ~30% stake in Yahoo! for $100m)
▫️In 2000: was worth $78B at peak Dotcom and was the richest person in the world for 3 days (ahead of Gates)
▫️The bubble burst and he lost 99% of wealth
▫️In 2000, puts $20m into Alibaba for a 34% stake (sold out almost entirely by 2023 and made ~$72B)
▫️Lost $14B on WeWork
▫️Once owned ~5% of Nvidia but sold it all for $3.6B in 2019 (that stake would now be worth $90B)
▫️In 2016, Softbank bought Arm Holdings for $32B (still owns 90% and the stake is $114B, a gain of $82B)

Based on his ownership in Softbank and other investment vehicles, his personal wealth is currently ~$15B.Image
Masa in the 90s:

Masa $72B Alibaba:

Masa Arm:

Masa wild daily investing routine during COVID: forbes.com/forbes/1999/07…
ca.finance.yahoo.com/news/masayoshi…
finance.yahoo.com/news/masayoshi…
economist.com/business/2021/…
Image
Would love to get into one of these 8am to 10pm Zoom calls for the app and ask Masa for 0.000000000069% of the $100B Vision FundBearly.AI
Read 4 tweets

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