Corp. is adding more new menu items this week and is testing a mobile payments solution in continued efforts to ramp up its new-product pipeline and increase same-store sales in the United States.
The rollout of Mighty Wings on Monday has given way to more new items, including the choice of steak in its breakfast sandwiches and the test in one market of a $14.99 meal bundle.
According to a Bloomberg News report, McDonald’s USA has begun introducing steak as an option on breakfast sandwiches and will offer the thicker protein at about 9,600 units in the United States, about two-thirds of its domestic system of more than 14,100 restaurants.
In addition to new choices like a Steak, Egg and Cheese Biscuit at many restaurants, McDonald’s also has initiated a test of a bundled meal, the “Blitz Box,” in the Kansas City, Mo., market as a tie-in with the Kansas City Chiefs and the National Football League. USA Today reported that the $14.99 Blitz Box includes two Quarter Pounders with Cheese, two medium orders of French fries and 10 Chicken McNuggets with dipping sauces.
The menu moves come in a year when McDonald’s has already been prolific in its new-product introductions, even as sales have flagged against difficult year-earlier comparisons and a weak eating-out market.
While McDonald’s monthly same-store sales have risen and fallen in fits and starts this year, the brand has grown its market share of the quick-service sandwich category in every month of 2013, securities analyst Jeffrey Bernstein of Barclays Capital wrote in a research note last week after meetings with top McDonald’s executives.
Bernstein added that McDonald’s is not attributing this year’s struggles significantly to outside competition, even though rivals have enjoyed their own successful product launches, like Wendy’s Pretzel Bacon Cheeseburger or Taco Bell’s Cool Ranch and Fiery Doritos Locos Tacos.
“McDonald’s [is] attributing only 10 percent of their struggles to the competition and 90 percent to their own internal missteps, along with broader macro pressures,” Bernstein wrote. “In fact, any of their closest competitors would need to generate an incremental 4 percentage points of comparable sales to reduce McDonald’s comps by 1 percentage point.
“To resolve their own missteps, the focus is value and new-product news,” Bernstein continued, “with management very pleased with the 2013 calendar.”
Already this year, McDonald’s has rolled out the Egg White Delight McMuffin, the Blueberry Pomegranate Real Fruit Smoothie and Premium McWraps. The chain also replaced the Angus Third Pounder line of premium burgers with three new varieties of its Quarter Pounder with Cheese.
To support all of those new products, McDonald’s moved up its annual Monopoly promotion and featured the new items as prizes in the game. Monopoly traditionally runs in McDonald’s September to October promotional window, but the brand accelerated the game’s return to the July-through-August period this year.
Same-store sales in the United States rose 1.6 percent in July for McDonald’s, though the benefit of Monopoly moderated somewhat in August and was largely offset by tepid consumer spending last month, as McDonald’s domestic same-store sales increased just 0.2 percent in August.
However, Bernstein noted, the absence of the Monopoly promotion in September and October would create an opening for the promotion of more new products, including Mighty Wings, which began rolling out systemwide Monday.
Feedback on the product so far is encouraging, he wrote.
“[Wings were] a great product in test, performing in line to ahead of expectations in test markets Atlanta and Chicago,” he wrote. “With McDonald’s new NFL contract and related sponsorships with 16 NFL teams, the September start of the NFL season would seem a strong Mighty Wing launch period, leveraging existing partnerships.”
In five other test markets, McDonald’s has been trying a “Dollar Menu & More” version of its value platform, which would allow for new flavor profiles in its smaller sandwiches, such as a double-patty version of the Grilled Onion Cheddar burger or Bacon McDouble.
Moving forward on mobile
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McDonald’s spokeswoman Ofelia Casillas confirmed in an email to Nation’s Restaurant News that McDonald’s is also testing a mobile payments solution in Salt Lake City and Austin, Texas.
“We’re always looking at new technologies to make the McDonald’s experience better for our customers,” Casillas wrote. “We are testing some of these technologies in a few markets, so it’s premature to speculate on the decisions we may make after the tests, but we’re excited to bring a cutting-edge experience in the future to our customers.”
The mobile solution was one of several throughput initiatives recently discussed in meetings between McDonald’s Corp. and regional teams of franchisees represented by the National Leadership Council, or NLC.
According to a memorandum of notes recapping a June meeting of an NLC meeting, McDonald’s Corp. is testing the solution to include for mobile payments, including an outdoor payment device for the drive-thru; mobile ordering and pick-up for both in the stores and curbside; and customer-engagement solutions like targeted offers and a mobile-loyalty system.
Under a “what we need to do” heading in the memo, the franchisee author said the NLC and McDonald’s would have to work together to “help fellow owner-operators understand that, while many competitors are publicizing their efforts to get an initial foothold in the mobile arena, no one has developed a comprehensive solution that integrates all the opportunities this technology presents.”
McDonald’s has made previous mobile-marketing efforts, including the introduction this past January of quick-response, or QR, codes on all its packaging in the United States. When scanned with a Web-enabled camera phone, the QR codes activate a special Web page on the phone’s mobile browser to disclose the chain’s nutritional and caloric information.
McDonald’s operates or franchises more than 34,500 restaurants around the world, including more than 14,000 locations in the United States.