McDonald's outlines four global growth priorities
May 29, 2014
by Monica Watrous View Me on Google+
NEW YORK — Four priorities shape the McDonald’s Corp.’s strategic framework for global growth. Don Thompson, president and chief executive officer of the Oak Brook, Ill.-based fast-food chain, discussed the four-prong plan during a May 28 presentation at the Sanford C. Bernstein Strategic Decisions Conference in New York.
The company’s first focus is its menu, with an eye to innovation as well as to transparency regarding ingredient sourcing and food preparation. McDonald’s core menu, including such items as its Big Mac and Egg McMuffin, account for 40% of sales, driving an emphasis in marketing those products.
“To complement our emphasis on our core menu, we are sequencing new menu items and also our limited-time offers in the four categories where we believe growth will outpace the overall industry,” Mr. Thompson said. “Those categories are premium beef, chicken, breakfast, a category where we’re the industry leader, and beverages, particularly coffee and blended ice drinks. Our menu teams are creating and testing new product ideas and sharing local innovations with each other around the world to build even stronger menu pipelines for every market.”
Customization represents another opportunity for McDonald’s, as consumers demonstrate an increased desire to personalize their meals, Mr. Thompson said.
“We’re exploring these and many other enhancements, including bolder flavors and emphasizing fresh ingredients as we develop future menu innovations,” he said.
McDonald’s second priority for global growth relates to customer service, within the four walls of the restaurants and beyond.
“Around the world, our restaurants are increasing their emphasis on properly staffing, scheduling, and positioning restaurant employees,” Mr. Thompson said. “In addition, we’re more fully leveraging the investments that we’ve already made in technology, such as our global point-of-sale system and our free in-store wireless access. This helps us create an even easier customer experience today, and it provides the infrastructure to engage customers in new ways in the future.”
The chain’s global digital strategy includes simplifying the customer’s experience with mobile ordering and payment, as well as engaging consumers through social media and digital marketing campaigns.
“Digital is reshaping consumers’ definition of convenience and we want to fully deliver on these new expectations,” Mr. Thompson said. “Finally, as part of our ongoing effort to keep our brand modern and contemporary, we’re re-imaging more than 1,000 restaurants worldwide this year.”
Convenience figures into the company’s third initiative. McDonald’s plans to open between 1,500 and 1,600 new restaurants in both established and emerging markets, extend its platforms of delivery service, drive-thrus and McCafe beverages, and promote its value options across day parts.
McDonald’s fourth and final priority is establishing trust and brand loyalty through sustainability and social responsibility efforts.
“Just last year we announced a powerful global partnership with the Clinton Foundation, The Alliance For a Healthier Generation, to increase customers’ access to fruits and vegetables in 20 of our top markets, which represent more than 85% of our sales,” Mr. Thompson said. “And last month we launched our latest social responsibility and sustainability report, which includes our first ever global framework and targets. The framework is organized around five key pillars, and those are food, sourcing, people, planet and community. And these five pillars reflect the areas that matter, again, most to our customers and to our business.”
With 35,000 restaurants in 120 countries, McDonald’s said it is the largest player in the $1.2 trillion global informal dining market but has less than 10% market share.
“While we are addressing these areas of opportunity, it’s important to note that there is no silver bullet or a single solution,” Mr. Thompson said. “It is about combined solutions, but rather it’s about optimally sequencing elements of our existing global customer-focused initiatives, based on local market dynamics and executing them at even higher levels than we do today. While it’s important to underscore that it would take time for consumers to notice the changes and reward us with increased visits, we are confident in our ability to improve over time.”