Understanding McDonald's: Comprehensive company primer and profitability analysis (Part 18 of 21)
Strategy specific to the United States
In 2013, the U.S. business will focus on driving sales and guest counts by enhancing the entire customer experience through the pillars of its plan and three global priorities. Its menu pipeline is more balanced in 2013, with a continued focus on great taste, quality ingredients, and variety. Company management will satisfy customers’ needs with the food they crave by balancing core favorites with limited-time offers and innovative new products across the menu. Menu news will be augmented with brand messages that highlight its quality food ingredients, efforts around promoting children’s well-being, and community involvement. McDonald’s will enhance its Dollar Menu and introduce new products to highlight McDonald’s value at every price point, across all menu categories. It’s continuing its major remodel program by updating about 800 locations in 2013. At the same time, it’s continuing to improve restaurant operations through appropriate staffing and a focus on friendly, accurate service as well as innovative order taking. Plus, the company will increase the number of restaurants that operate 24 hours a day and strive to be its customers’ favorite eating-out destination.
Strategy specific to Europe
In Europe, McDonald’s sees growth opportunities in breakfast, core menu items, beverages, and extended hours. Its business plans focus on building market share by emphasizing value across all day parts and new restaurant growth. In some markets, the company’s value offerings will evolve from a low-end entry price to multiple entry prices across its menu. This value menu evolution is intended to grow guest counts with compelling affordability and enhanced trade-up opportunities through an extended range of options.
In 2013, the company will reimage approximately 450 restaurants as it progresses towards its goal of having 100% of its interiors and over 85% of its exteriors reimaged by the end of 2015. It will also open nearly 300 restaurants. Management will leverage production and service enhancements by optimizing kitchen platforms and accelerating the deployment of technologies, such as updating the point-of-sale system and rolling out multiple order points via self-order kiosks, hand-held order devices, and side-by-side drive-thrus. These initiatives will enhance the customer experience, help drive guest counts, and improve labor efficiency. Despite the near-term headwinds due to economic uncertainty and government-initiated austerity measures implemented in many countries, Europe offers significant long-term opportunity, and it’s well positioned to capitalize on this segment’s potential.
Strategy specific to APMEA
In APMEA (Asia Pacific, the Middle East, and Africa), the company will advance efforts to become customers’ favorite place and way to eat and drink by reinvigorating its long-term value platforms, accelerating growth at breakfast, and focusing on menu variety and convenience. Value will remain a key strategy and growth driver to build traffic with a focus across the menu at all day parts, combined with trade-up strategies to build average check. For example, Australia will evolve its Loose Change Menu, and Japan will focus on building average check through trade-up opportunities with promotional products and a focus on breakfast. The company plans to grow breakfast traffic in APMEA through increased marketing efforts, value, accessibility, and operational excellence. These markets will continue to balance core and limited-time offers and will execute a series of exciting food events that celebrate its core menu and the segment’s all-time favorite product offerings.
At the same time, management will continue to leverage the diversity of the segment to identify and scale new products and platforms. Convenience initiatives will focus on optimizing its drive-thru and delivery services through operation efficiencies and online capabilities. In China, for example, a new web-ordering system will enhance the customer experience and drive new demand through delivery.
The company will grow its business by opening approximately 850 new restaurants and reimaging about 225 existing restaurants while elevating its focus on service and operations. In China, it will continue to build a foundation for long-term growth by opening over 300 restaurants, consistent with its goal of reaching 2,000 restaurants by the end of 2013.
Browse this series on Market Realist: