CHICAGO — Executives of McDonald’s Corp. are identifying opportunities to become faster, more innovative and more efficient as an organization. A key strategy moving forward is “implementing horizontal ways of working,” said Christopher J. Kempczinski, president and chief executive officer.
“For years, our organization, like many others, was too siloed, whether that be geographically siloed or functionally siloed, and yet, our biggest challenges and opportunities are rarely limited to just one market,” Mr. Kempczinski said during an April 25 earnings call. “They can’t be solved by only one function. It requires collaborating across the organization to bring the full breadth of McDonald’s skills and experiences to devise the best system solution that can be scaled globally. In other words, they need to be solved horizontally.”
Removing internal obstacles and standardizing common processes to drive speed and consistency in operations are central to McDonald’s approach.
“We’re an innovative, entrepreneurial organization,” he said. “But once a part of our system somewhere has solved the problem or developed a novel idea, we need to stop the work elsewhere. We don’t need every market to invent its own light bulb, so to speak.”
The company has rolled out enhanced cooking procedures across the globe to improve the quality of its burgers. Upgrades include softer buns, more consistently melted cheese, seared patties and more Big Mac sauce.
“We recently began to introduce these changes to our US customers through a rolling deployment, and the initial reaction has been positive,” said Ian Frederick Borden, executive vice president and chief financial officer.
McDonald’s also is testing improvements to its mobile app in the United States that will “provide a more seamless interaction,” Mr. Borden said.
“Using existing location data, it allows our crew to start assembling a customer’s order prior to their arrival at the restaurant, ultimately delivering hot, fresh food when customers arrive to pick up their order,” he said. “While it's still early days deploying this new digital enhancement, initial results are already pointing to improved service times and elevated customer satisfaction scores.”
The changes are expected to build on McDonald’s continued momentum in markets around the world.
Net income for the first quarter ended March 31 was $1.8 billion, equal to $2.45 per share on the common stock, up 63% from net income of $1.1 billion, or $1.48 per share, in the year-ago period. Results in the current quarter included pre-tax restructuring charges of $180 million, while results for the comparable quarter included pre-tax expenses of $127 million, primarily incurred to support the company’s business in Russia, and nonoperating expense of $500 million related to the settlement of a tax audit in France. Excluding the special items, adjusted net income increased 13% to $1.9 billion from $1.7 billion, reflecting strong operating performance driven by higher sales-driven franchised margins, according to the company.
Revenues totaled $5.9 billion, up 4% from $.5.7 billion in the prior year.
Comparable sales in the US market grew 13%, benefiting from strategic menu price increases and positive comparable guest count growth. Comparable sales in international operated markets increased 13%, led by strong comparable sales across Australia, Canada, France, Germany and the United Kingdom. In international developmental licensed markets, comparable sales grew 13%, with strong performance in Japan.
“These results reflect strong consumer demand for McDonald's that we are seeing around the world despite a challenging operating environment and historically low consumer sentiment in many markets,” Mr. Kempczinski said.Shares of McDonald’s Corp. trading on the New York Stock Exchange dipped by 0.6% to close at $291.51 on April 25.