McDonald’s prioritizing U.S. menu plan in 2013

by Eric Schroeder
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BOSTON — McDonald’s Corp., which by its own admission suffered a “stall” in innovation within the United States last year, plans to avoid a similar fate in 2013 with more product introductions across the restaurant chain’s entire portfolio of categories, said Don Thompson, president and chief executive officer.

In a March 13 presentation at the UBS Global Consumer Conference in Boston, Mr. Thompson said McDonald’s missed out on a product launch early in 2012 after a poor screening from its consumer base, and wasn’t able to really get the ball rolling until a new line of beef sandwiches hit the market in the fourth quarter.

“We were just weaker in terms of what the overall implementation was within the marketing and menu calendar,” he said of the company’s efforts in 2012.

But Mr. Thompson said the company initiated steps toward the middle of last year that he believes may change the trajectory of the overall U.S. business. The goal is to make the 2013 U.S. menu plan “much stronger,” he said.

“This year you will see more products, and they will be across the portfolio of categories,” he said. “So it won’t just be beef. You will see beef, and you will see beef in a substantial way. But you will see chicken in a very different way for McDonald’s — maybe a couple different ways this year for McDonald’s.

“You will see beverages talked about again. We’ve got tremendous iced blended beverages. After April, we can talk about iced blended beverages. So it’s those kinds of things that we have to stay on top of. Breakfast innovation: We have a good share of breakfast around the U.S. We just have to go back, and we’ve got some products that will come out that will help us in that regard as well.”

Mr. Thompson said McDonald’s won’t remove anything from the menu that is a major driver of the business, but does plan to do more rotating of products going forward.

“If a product does rotate out of what’s called core menu, which is Everyday menu, more than likely, if it was a good product, you will see it rotate back through for time periods,” he said.

He added, “It’s about energy, excitement and innovativeness in the menu pipeline. We never want our menu to become stale.”

Beyond the basics of reinvigorating the U.S. product pipeline, Mr. Thompson was asked about value vs. premium, as well as growing concerns about healthy food. In both instances, balance is key, he said.
He said McDonald’s will look for the proper balance on its menu as it relates to value vs. premium. Failing to do so may result in the restaurant chain losing ground, he said.

“We have to have a balance between bringing in transactions, guest counts, along with being able to have trade up to higher average check, which is where the premium products come in,” Mr. Thompson explained. “So we have to have a premium product that is enticing, is relevant, it is exciting to consumers.

“And at the same time, we have to be cognizant of the fact that it’s still a very tepid overall macro economy around the world. And that means that certain people are concerned about — many consumers have confidence issues, discretionary spending is down in some areas. So we have to make sure we have a value platform that is a good entry-level price for consumers as well. If you have a good entry-level price and we have the opportunity to trade up and have some good products there, as well as filling that in up throughout the menu, then we’ll be in good shape at McDonald’s.”

Mr. Thompson also said McDonald’s strives for balance in providing healthier foods, including through its salads, oatmeals and fruit parfait offerings.

“We have made a lot of changes in the McDonald’s menus in the last five, six years,” he said. “We have added a lot more fruits and vegetables to the menu … And there are certain categories, i.e. our salads — we have tremendous salads. It’s amazing that more people don’t even know about the salads at McDonald’s.”

He added the company took steps to reduce sodium in some of its products in recent years.

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