McDonald's pledges to simplify, localize, and customize
After its dire third quarter sales report, McDonald's is embarking on a new initiative to customize and provide more choices to its consumers. The 'Create Your Taste' customization kiosks testing is taking place in Australia and will be in three US markets by the end of next year.
After its dire third quarter sales report, McDonald's is embarking on a new initiative to customize and provide more choices to its consumers. The 'Create Your Taste' customization kiosks testing is taking place in Australia and will be in three US markets by the end of next year.
Relevance, simplicity, localization and customization were the watchwords of McDonald鈥檚 Corp.鈥檚 embattled response to a Q3 sales report that was even worse than the most dire forecasts. Insisting he is 鈥渃onfident in our ability to regain momentum,鈥� President-CEO Don Thompson told analysts that the brand needs to provide more choices and customization, which is what he says consumers are looking for. 鈥淲e haven鈥檛 been changing at the same rate as our customers鈥� eating-out expectations,鈥� Thompson conceded. 鈥淪o we鈥檙e changing and changing aggressively.鈥�
The 鈥淐reate Your Taste鈥� customization kiosks testing in Australia will be in three U.S. markets next year by the end of 2015.聽
Whether its aggressiveness will be counter-productive, it remains to be seen. In January, McDonald鈥檚 will simplify its menu, tossing out low-volume products (which he would not specify). At the same time, McDonald鈥檚 will restructure its U.S. system to give more local markets autonomy over their menu so they can add products they believe will do well in their markets. If Mozzarella Sticks or Chorizo Burritos (both currently testing) are somehow determined to be 鈥渞elevant鈥� to a region, the co-op can add them to the menu without an OK from corporate. This sounds like an echo of one franchisee鈥檚聽recent complaint聽in the Janney Montgomery Scott survey that 鈥淭hey simplify鈥nd then just add more products.鈥� But Thompson insists it will make menus more local, relevant and appealing.
Core products like Quarter Pounders will get more national marketing support. But while McDonald鈥檚 Australia promises to have the build-your-own-burger kiosks in all 900+ stores there within a year, Thompson said聽just three U.S. markets聽will begin testing by the end of 2015.
Thompson once again vowed to ramp up the company鈥檚 use of digital tools, including the rollout of the Apple Pay mobile payment system to all its U.S. stores (including the drive-thru). A reprioritization of resources will help fund all these initiatives, resulting in fewer new stores than had been expected in 2014. 鈥淲e are targeting to identify and redirect nearly $100 million in savings for future, long-term growth initiatives such as the digital strategy and McDonald鈥檚 Experience of the Future,鈥� said Thompson.
McDonald鈥檚 U.S. comp sales were聽down 4.1%聽for September and 3.3% for Q3. Europe鈥檚 quarterly comps were off 1.4% while the Asia/Pacific/Middle East/Africa region was down 9.9% for the quarter. But at least these declines had more easily identified causes. Russia鈥檚 political game-playing, resulting in more than 200 McDonald鈥檚 stores undergoing examinations for health violations, and the closing of Crimea鈥檚 stores accounted for the bulk of Europe鈥� decline. The tainted-food scare in China (which accounts for 10% of global sales) that reverberated through Japan and Hong Kong continues to depress Asian sales. Thompson said it likely will take six to nine months to fully restore consumer confidence there.