McDonald’s Looks Ahead to Strategic Plan to Attract Enhanced Brand Loyalty

McDonald’s has spent the past two years transforming its business, making it more customer-friendly and flexible to meet today’s digital demands from consumers.

CFO Kevin Ozan talked about how the company is transforming and making inroads through enhanced customer engagement and customer experience at the RBC 2017 Consumer & Retail Conference.

“Steve (CEO Easterbrook) and I got came in at the beginning of 2015 and the last couple of years we’re about getting the right organization structure in place, the right people in place, making some tough decisions in the last 18 months, I’ll say, related to some restructuring in the company, delayering of the company, that helped set us up for this velocity growth plan, which is our growth plan that we talked about the beginning of March this year,” he explained.

Ozan said the growth plan has three components.

“It’s retaining the customers that we have, it’s about regaining transactions where we’ve lost over the last several years, and the third is really about converting casual customers,” he explained.

The U.S., Ozan noted, is at the center of the company’s turnaround.

“It started with all-day breakfast,” he explained. “That was the one thing that got things moving in the right direction. And I know everyone’s concern at the time was is it a one-hit wonder, or could it be a one-quarter wonder, or is it going to last a year? But what that really did was help elevate breakfast the way all-day breakfast goes. All-day breakfast started out really high and then it evens, kind of settles in at a place less than it started out, but certainly above where we were prior to that. So, we were effectively able to raise what we call our baseline.”

Then, Ozan added, “you have to be able to continually layer on new platforms on a growing baseline. We have never wanted to layer on platforms on a declining baseline because I think that’s a recipe for−I won’t say disaster, but not good things. And so, it was important for us to first get our baseline trend kind of settled before we could start kicking in with these additional growth drivers. The additional growth drivers for the U.S. will be things like digital; will be where we’ll have order and pay in all of the U.S. restaurants by the end of this year; it will be things like delivery.”

Ozan talked about the Experience of the Future in the U.S., which encompasses remodeling the restaurants.

“Right now, we’re about half remodeled in the U.S. so it encompasses remodeling the other half of the restaurants, as well as putting in these Experience of the Future elements, which are things like self-order kiosks, table service, and guest experience leaders that help you through using the kiosk and bringing the food to your table,” he said.

McDonald’s is finalizing a holistic plan for the next several years.

“In the U.S. it’s experiences of the future, it’s digital, delivery, and then the fourth component that’s important in the U.S. obviously is food,” Ozan added. “If you think about what we’ve done over the last couple of years in the U.S., it’s taking out the antibiotics in the chicken; it’s taking out high fructose corn syrup in the buns; it’s moving toward cage-free eggs; it’s taking out all the artificial preservatives in chicken nuggets; it’s moving the fresh beef for our Quarter Pounders. So, what you will have seen and you should continue to see are specific moves that kind of tell the customer that we are improving food quality and food taste.”

Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that he’s impressed by McDonald’s strategic direction.

“In the marketing industry, we often get caught up in our own world,” Magliocca explained. “Technology, analytics, content, there’s a lot going on and it’s all narrowly focused. Yet the most important thing any brand can do, and it sounds like McDonald’s is on the right path—is to align product to customer expectations.  For McDonald’s, that meant removing antibiotics from chicken, high-fructose corn syrup and other shifts in customer’s expectations of food. We sometimes forget that the first step in customer loyalty is producing a product worth a customer’s time and attention.” 

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