McDonalds’ turnaround is food for thought

Consider how these five points may apply to your business:

Don’t lose focus
The success of all day breakfast has been phenomenal in its contribution to McDonald’s improved results, but “All day breakfast was a primary driver… but not the sole driver”, Easterbrook said. “We do expect it to settle down and that’s why we are working on a number of other initiatives in the business to follow that up, so we don’t want this to be a single initiative turnaround plan.” Easterbrook said continued investment in food quality and the fabric of its restaurants, the development of McDonald’s value platform, operational improvements and staff initiatives will all have a role to play. “We believe that building these other platforms of growth on top of that will keep us competitive in the market place and taking share”.

Realistic and regularly reviewed pricing
Easterbrook said McDonald’s doesn’t make a single pricing decision for each year.”Pricing decisions are made across the year and there are multiple opportunities to reassess and adjust. We think about pricing relatively similarly around the world and that is we look at a whole bunch of factors, that includes food inflation, GDP growth, or internal cost inflation,” he said. “So for 2015, the US increased their prices by a little over two per cent compared to food away from home inflation of around two and a half per cent. For 2016, food away from home inflation is expected to be two and a half to three and a half per cent so we would continue to think about pricing in a similar way as we’ve been and keep an eye on that food away from home inflation as well as food at home inflation.”

Apps and data matter
While it is early days for the McDonald’s app, the company sees an exciting future having launched the app in the US at the end of the third quarter 2015 there have been more than 7 million downloads. The app is offer based and McDonald’s is seeing this drive consumer behaviour, with offers being activated and redeemed in restaurants. McDonald’s say the app helps it to understand their consumer behaviour and be more rewarding to them. The company will be adding other features to the app this year and expects it to be a “helpful contributor to sales in 2016”.

Customisation is important
In his presentation, Easterbrook said customisation is important, but so is keeping the experience simple. “We don’t know how much customisation customers truly [want]. They like a little bit of flexibility but they don’t want you to overcomplicate it so we’re working on that. For example, we’re working on the manner in which customers can order premium burgers away from the drive through or at the front counter… that’s were self-order kiosks and potentially table service comes into play.”

Care about your customers’ concerns
Changes introduced in response to consumer feedback such as reduced anti-biotics in chickens and cage-free eggs have helped build loyalty and business. As Easterbrook explained: “Customers know that you care about the same things that they care about and they respond with their business”.

This story first appeared in Convenience and Impulse Retailer.