The Shake Shack Economy, a recent article in The New Yorker, is far more than a terrific business story. It’s a thought-provoking piece about changing demographics and trends and what is possible for companies that take the far lesser worn — but far more profitable — path of category creation (i.e., fast-casual dining) versus the incremental changes favored by the traditional companies who largely ignore new trends.

It got me thinking about the parallels between the decline of the fast food industry and a lot of burn-and-churn, business-as-usual fundraising.

Let me explain.

Traditional fast food chains like McDonald’s and Burger King are rapidly losing market share to what’s called ‘fast-casual’ chains like Shake Shack, Chipotle, and Panera. Although ‘fast-casual’ is still only a fraction of the traditional fast food business, it is growing remarkably fast. Today it accounts for $34 billion in sales and growing.

Why are consumers willing to spend more than twice as much at Chipotle than McDonald’s? And can we fundraisers learn anything from these emerging trends?

According to experts in the field, ‘fast-casual’ consumers have become far more discriminating. They want the fresh and preferably organic ingredients that produce far better tasting food. And they’re more than willing to pay the far higher prices for it. Starbucks anyone?

The fast-casual businesses elect to offer better food, served equally fast, and to provide a better overall experience, thus allowing them to charge more. What charity is behaving this way? Electing to offer a different, better experience tied to donor preferences and needs … and as a result, ‘charging’ and making more? Any?

Meanwhile, as the fast-casual ‘little guys’ have grown rapidly, the fast-food giants fail to change beyond incremental window dressing — ‘lite’ menu options with the same assembly line operation and same service experience. This is akin to trying to grow sustainably by swapping the red envelope for the blue one.

Additionally, the ‘big boys’ elect to focus not on true customer preference, but instead, on their historical (but dangerously wrong) belief that keeping prices down, couponing and other gimmicks — with the same frozen food and assembly line — will magically reverse the trend. Now, they’re faced with getting their lunch eaten (so to speak) by the upstarts.

Can the old chains catch up? Given the fact that consumers often don’t know what they want until they actually can get it, the problem for the old chains is those consumer expectations are spreading.

From what I’ve seen in our nonprofit sector to date, no ‘fast-casuals’ have really been created. There are certainly some more forward-thinking charities who are open to re-thinking the business, but the first-mover advantage still seems wide open for ‘chipotle.org’.

One clear-cut opportunity for those first movers to create the nonprofit version of fast-casual is a truly donor-centered and donor-service oriented organization that picks off donors from the mass mail, ‘industrialized’ charities.

Once a donor experiences true donor care, as opposed to that mass-produced, hackneyed tripe that passes for ‘acknowledgements’, ‘donor cultivation and recognition’ and all the frozen food equivalents so many organizations spew out there, my guess is they’ll head for the exits.

The signs of change are all around us. The question for all organizations regardless of size is whether they will focus their donor care on ‘taste’ and ‘freshness’ rather that on what’s quick, cheap and convenient for the organization.

Thoughts?

Roger