McDonald’s other segment initiatives
Previously in this series, we looked at some of the initiatives McDonald’s plans to take to turn the company around.
The company lists the US, Germany, Japan, and Australia as its priority markets. Although McDonald’s has a strong presence in China, KFC under the umbrella of Yum! Brands (YUM) dominates that market.
During the previous earnings release, the company admitted that it had not kept up to the “same rate as its customers’ eating out expectations.” With this statement, the company seemed to be hinting at the shifting demographic trend in the US. Millennials are becoming the dominant target for many companies including Chipotle Mexican Grill (CMG), Panera Bread (PNRA), Starbucks (SBUX), and others.
These companies are held by the Consumer Discretionary Select Sector SPDR Fund (XLY).
Focusing on customer convenience
McDonald’s answer to this shifting demographic is to introduce a more personalized and locally relevant menu, and to serve it all up in a more contemporary atmosphere. Bear in mind that McDonald’s has been remodelling its stores, but customers seem to have sent a clear message with same-store sales that mere facelifts aren’t going to be enough to bring them back.
The company introduced Apple Pay in its 14,000 restaurants across the US and is offering free Wi-Fi in all of its restaurants around the world. In countries such as France and Australia, the company has introduced self-ordering kiosks, along with mobile order and pay capabilities.
These various initiatives fall under the company’s two programs called “Experience of the Future” and “Create Your Taste.” We’ll be watching how these program evolve in the upcoming earnings release.
Next, we’ll turn our attention to McDonald’s restaurant unit growth.