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Two months ago, McDonald’s CEO Steve Easterbrook spoke of 2016 as a year of "purposeful change" that reinforced the iconic company’s foundation as it prepared to “prioritize initiatives so we can further accelerate our momentum.”
Despite a 1.3 percent drop in comparable sales last year, 2016 marked the company’s strongest year of global comparable sales since 2011. Prioritizing growth initiatives to elevate the customer experience is what McDonald’s plans to do this year.
On March 1, McDonald’s officials unveiled a long-term global growth plan, which focuses on enhancing digital capabilities and the use of technology to dramatically elevate the customer experience; redefining customer convenience through delivery; accelerating deployment of Experience of the Future restaurants in the U.S.; initiating a new three-year target for cash return to shareholders, and establishing new financial targets for sales, operating margin, earnings per share, and return on incremental invested capital
“We have fundamentally changed the trajectory of our business over the past two years,” said Easterbook. “Now, we are fit for purpose, ready to build on our momentum and transition to focus our efforts on profitable, long-term growth. We are building a better McDonald’s, one that makes delicious feel good moments easy for everyone, and I believe the moves we are making will reassert McDonald’s as the global leader in the informal eating out category.”
To deliver sustained growth, Easterbrook noted, “we have to attract more customers, more often. Our greatest opportunities reside at the very heart of our brand−our food, value, and the customer experience.”
Chirpify CEO Chris Teso weighed in on the bold initiatives McDonald’s officials announced.
“McDonald’s is looking to tap into a growing trend among customers – the desire for utility,” Teso explained to Loyalty360. “Increasingly, consumers view their mobile devices as a remote control which they want to use to engage with brands. Being able to order on your mobile device is a good first step in providing customers with the utility they desire. To truly make inroads into their three key tenets, it will be important for McDonald’s to connect their mobile interface to meaningful experiences and consumer programs that increase customer acquisition, loyalty, and personalization.”
McDonald’s new strategy connects key brand tenets to well-defined customer groups built around three pillars:
Retaining existing customers by fortifying and extending our areas of strength. Through a renewed focus on areas such as family occasions and food-led breakfast and transforming the experience in our restaurants, McDonald’s will build on the strong foothold it has and grow the core of the business.
Regaining customers lost to other QSR competitors. As customers’ expectations increased, McDonald’s simply didn’t keep pace with them. Making meaningful improvements in quality, convenience and value will win back some of McDonald’s best customers.
Converting casual customers to committed customers by being more present in underdeveloped categories and occasions and competing more aggressively given the untapped demand for McCafé coffee and other snack offerings.
Inside its restaurants, McDonald’s is bringing greater control, convenience, and personalization to customers using kiosks to place orders, staffed with guest experience leaders to assist in the process. Customers can place their orders and skip the front counter entirely, with their food brought right to their table.
What’s more, customers will be able to place orders directly on the mobile app for pickup or have a kiosk recognize their app profile, which holds customized favorites and preferred payment methods.
Mobile order and pay will be launched in 20,000 restaurants in some of McDonald’s largest markets, including the U.S., by the end of 2017.
Convenience through delivery?
McDonald’s officials believe that, through technology, delivery has changed the way customers order, pay, track and receive food, and provide feedback. Coupled with the explosive growth in third-party delivery companies, McDonald’s officials believe this is a huge opportunity for growth.
Because of its extraordinary footprint, McDonald’s is uniquely positioned to become the global leader in delivery. In McDonald’s top five markets (U.S., France, the U.K., Germany and Canada), nearly 75% of the population lives within three miles of a McDonald’s. McDonald’s is already one of the largest providers of delivered food in the world, with annual systemwide delivery sales of nearly $1 billion across various markets including China, South Korea, and Singapore. China has tripled its delivery business since its launch in 2008. In 2016 alone, China’s delivery business grew 30%.
“Through enhanced technology to elevate and modernize the customer experience, a focus on the quality and value of our food, and redefined convenience through delivery, we have a bold vision for the future and the urgency to act on it,” said Easterbrook.
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