What is in this article?:
- McDonaldâ€™s maintains growth plans despite difficulties
- Opportunities around the world
Executives say the company will stick with its goals for sales and unit growth, reimaging and digital innovation for 2014.
Opportunities around the world
Historically, McDonald’s has been able to enact menu price increases most years between 2 percent and 3 percent to counter usual increases in food or labor costs. However, Bensen said, inflation in general in the United States has trended below 2 percent, and prices at grocery stores are running only about 1 percent higher than a year earlier.
“If we still have low inflation levels around the world, that hinders our ability to take price,” Thompson said. “From a guest count perspective, there is more competitive intensity around price. What it really boils down to is how do we differentiate ourselves around the experience we can offer at McDonald’s.”
Menu innovation would be crucial to the effort, specifically in the four major areas of chicken, premium beef, beverages and breakfast, he said. Ongoing remodeling efforts would address McDonald’s strategy to modernize its restaurants, and the chain would look to “broaden accessibility” with new-unit growth and introducing affordable options at all price tiers, Thompson added.
He noted that McDonald’s “captures less than our fair share of the overall beverage category” and that seizing that opportunity could translate into $3 billion of annual sales worldwide.
The drink categories growing most around the world are coffee and tea, McDonald’s executives noted, adding that improvements around coffee could naturally strengthen another core part of the menu: breakfast. Chief operating officer Tim Fenton noted that the McCafé beverage format would spread to more markets around the world.
“We’ve learned that breakfast and coffee sales go hand in hand,” he said, “and many emerging markets with aspirations of 25 percent of sales coming from breakfast have learned to grow that daypart with coffee. It’s that loss leader that gets [customers] in and trades them up.”
Diving deeper into digital
Digital enhancements, either on the marketing end or in the restaurants with new payment or ordering technology, was the other potential sales driver featured at McDonald’s investor meeting. Moving from mass marketing to more one-to-one messaging with consumers would be “the future” for McDonald’s in the United States and around the world, global chief brand officer Steve Easterbrook said.
“We’ve relied on our scale and ability to speak with one voice to 69 million customers, and it’s worked nicely for us, but we must evolve,” Easterbrook said. “We must build deeper, one-to-one relationships that go beyond our restaurants, and it’s about being personalized, fun, social and interactive. We’ve made some progress.”
Tests of different digital initiatives are going on in several areas of the world, he said, including an augmented-reality “Track My Macca’s” app in Australia, self-order kiosks in France, and mobile-ordering tests in the United States and other markets.
“It’s all terrific stuff, but now we plan to move from market answers to system solutions,” Easterbrook said. “It doesn’t mean all markets will function the same way, but we will leverage our scale with outside partners to deliver the experience only McDonald’s can deliver.”
He noted that the company has been making investments with its franchisees around the world to fund an infrastructure that enables greater adoption of digital marketing. A new point-of-sale system that is becoming the standard in most McDonald’s restaurants around the world was a key step in building those foundations, Easterbrook said, as was rolling out free Wi-Fi to about two-thirds of its system.
“If we can make the customer experience smoother in every restaurant and make it fun, our customers reward us,” he said. “Part of the reason why certain markets are way ahead of others is because it’s not necessarily a race to be first, it’s to be the best.”
McDonald’s operates or franchises nearly 35,000 restaurants in more than 100 countries, including more than 14,000 locations in the United States.