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News - McDonald’s Looks for Growth by Three Key Elements

Mar/2014

28

McDonald’s Looks for Growth by Three Key Elements

For nearly a decade, McDonald’s same-store sales were climbing upward, but since 2012 top executives have finally realized and admitted to having hurdles to overcome, namely operational woes and a decline in consumer satisfaction.

“The U.S. is our largest market and has the most significant need for improvement in the near term,” said McDonald’s Chief Financial Officer Peter Bensen.  At the Consumer and Retail conference last week, the chain offered a look at how it plans to tackle those problems, and it boils down to three tactics: improving marketing, focusing on core products and stepping up digital marketing.

The company’s new U.S. chief marketing officer, Deborah Wahl, started at the beginning of March, and as of now it’s unclear what agency changes she might make, if any. However, the company has also revamped its marketing department. Marketing at the Golden Arches used to be organized by product, meaning there would be a marketing lead for beef or chicken, but it is now organized by consumer groups such as millennials, families and adults, and what products they are purchasing most.

In regards to digital marketing, McDonald’s hired it first Chief Digital Officer, Atif Rafiq, late last year.  A few short months later, the restaurant is fast-tracking for testing of mobile payments and ordering.

“By later this year, there will multiple tests around the digital payment and digital ordering in various markets around the world, and a lot of work on how do we come up with a loyalty program or this customer relationship aspect that can be uniquely McDonald’s,” said Mr. Bensen. He added that in a move that will be “a bit unnatural for McDonald’s,” the chain will likely have to put digital initiatives out into the market “that we know are not 100% perfect, but if you wait in this space until everything is 100% figured out, then you’re going to miss the whole opportunity.”

The third element consists of core products and the menu itself. The company blundered last year by rolling out four new products in the U.S., including the McWraps, blueberry-pomegranate smoothies, Egg White Delight McMuffins and its new line of Quarter Pounders, in too quick a succession, a move the chain said ultimately slowed down operations. Mr. Bensen said this year the company will focus more on core products such as burgers. Just this week, the chain rolled out its Bacon Clubhouse burger, an item it now considers a core-menu product.  Another emphasis will be on McDonald’s breakfast, which is one of its strongest pieces of business and one that will likely see increased competition when Taco Bell rolls out its breakfast at the end of the month.

With the year 2014 well underway, it seems the key components are in place to make it a success for McDonald’s.

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