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McDonald’s Plans To Boost Same-Store Sales

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Jan. 22 2015, Updated 11:32 a.m. ET

McDonald’s same-store-sales growth initiatives

In the previous part of this series, we learned about some of the challenges McDonald’s is facing in its international markets.

A turnaround is the company’s need of the hour, and McDonald’s management recognizes that. With this in mind, it’s listed some of the initiatives it has planned to put the company’s same-store sales back in the black:

  1. menu simplification
  2. adopting a digital strategy
  3. revamping its marketing approach
  4. creating new, locally-driven organizational structures

We should get more details from management about these initiatives during the upcoming earnings call.

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Menu simplification

McDonald’s needs to simplify its menu, as you can gather from the image above. Just one quarter pounder, one Snack Wrap, and one Premium Chicken Sandwich might be more appealing to customers than so many variants in each category. The company plans to launch a simplification strategy in US and then scale it globally.

Menu simplification may help ease the customers’ dilemma. But it’s also needed to improve kitchen operations and produce orders more effectively. A simpler menu should mean less wait time for customers both in-store and at the drive-through.

McDonald’s should look at a company that has nailed the throughput process—Chipotle Mexican Grill (CMG). This restaurant serves food to its customers quickly despite cooking it fresh. CMG’s same-store sales growth in the previous quarter was about ~19%, which is quite high.

Other approaches to same-store-sales growth

Other companies are taking different approaches to grow same-store sales. Burger King (BKW), for example, is selling off its company-operated stores so it can focus more on franchise stores. Panera Bread (PNRA) issued a new food policy to attract customers. Yum! Brands (YUM) is innovating newer food such as Dorito Tacos.

You can find these companies in the Consumer Discretionary Select Sector SPDR Fund (XLY).

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