McDonald’s has grown its systemwide sales by over 30% since 2019 and has done so consistently throughout its global business. Sure, some of that has come from pricing, but the chain has also gained market share amid an inflationary environment across the board.
During the UBS Global Consumer and Retail Conference Wednesday morning, CFO Ian Borden provided a look at how the company plans to maintain that topline momentum in the near term. One of the biggest priorities is a continued focus on its core menu; beef, chicken, and coffee make up 65% of those systemwide sales.
“What Covid reminded us about is our core menu is what our customers want. They want those favorite menu items. They want us to keep delivering those in new and creative ways,” Borden said.
In the beef category, McDonald’s is currently rolling out its Best Burger initiative, featuring a “series of small changes in how we cook and prepare” those signature offerings. The updated burgers have been deployed to 70 markets, with the rest of the system expected to be on board by the end of 2026.
“It’s driving significant improvements in taste and quality, which are the two biggest drivers of consumer visits to our restaurants,” Borden said. “So that’s the impact.”
The company is also experimenting with “larger burgers.” Borden said in the past, McDonald’s has tried to jump into the premium burger space and wasn’t successful because “premium” wasn’t the right opportunity.
“We now understand what the opportunity is is for large, more satiating burger. That opportunity is significant, it’s consistent across many of our large markets and we have innovated a couple of products we’re in the process of piloting,” he said.
That pilot is going to take place in two or three markets and will then be scaled if the burgers prove to be successful.
Chicken is also a massive opportunity because globally it is twice the size of beef and because chicken consumption is growing at a faster rate than beef.
“We believe we’re under indexed in our share of (chicken),” Borden said. Currently, four of McDonald’s 17 $1 billion equities are in chicken and Borden said the company needs to have more to be “known for chicken.”
The third core focus is coffee and Borden noted the company isn’t happy with its progress in the category.
“We have significant share, but we haven’t made the progress as consistently as we can and we believe the biggest opportunity is we’re not delivering consistent and quality execution against taste and quality – again, the two top drivers of visits,” he said.
For instance, McDonald’s has 100 different coffee machines across its business and intends to scale that down to achieve more consistency.
“We’re going to bring that consistency to life at scale and we believe by doing that, we can deliver a significant impact on taste and quality and deliver a better experience,” Borden said.
Digital advantages
Beyond a focus on its core offerings, Borden also believes McDonald’s has an advantage in digital and technology and the company will continue to push the gas here. The company currently counts 150 million active loyalty members and projects having 250 million by the end of 2027 generating about $45 billion in sales. Those consumers come in more frequently and spend more.
Borden said the company is adding more capabilities to its loyalty program, such as the ability to interact intuitively with customers based on their behaviors; providing them what they want, when they want it, where they want it, how they want it.
“That will be powerful because it will continue to unlock more value for the consumer and for the organization,” he said.
McDonald’s is also exploring partnerships with other brands and gamification through the loyalty program.
“There’s a lot of work that’s going to take time … but we’ve got a clear line of sight and the roadmap on how we’re going to start bringing the capabilities to life,” Borden said.
McDonald’s is also building a restaurant platform that extends the cloud to its 40,000 restaurants with an objective of creating an easier and more efficient operating system. And the company is building a company platform that brings data and analytics capabilities up to scale. The three tech platforms – consumer, restaurant, company – will require significant investments over the next several years but are expected to pay off.
“We strongly believe that technology and digital are a scale game, meaning you have an advantage with scale. We can invest more than anyone in our industry because of our size and level of resources that we have, and it takes a lot of resources to do it well,” Borden said.
Development
Finally, Borden is confident McDonald’s will maintain an advantage on development and is forecasting about 4% global growth this year accelerating into 4-5% the next two years. Much of that confidence comes from the investments the company has made throughout the past several years to modernize the estate.
“We invested $9 billion to modernize our estate and our estate in the U.S. is 98% modernized. There are lots of players in the industry that are nowhere near that and with higher interest rates, cash flow earnings pressure; it’s incredibly harder to do that in today’s context than when we brought it to life,” Borden said.
Accessibility is also a main driver of the chain’s growth.
“In the U.S. the population over the last 10 years has grown 11% and our net units have grown 4%, so we haven’t kept up with population growth,” Borden said. “I think our brand can penetrate in a more expansive way … I think that’s what gets us excited about the opportunity.”
Contact Alicia Kelso at [email protected]
