Filed under: McDonald’s, Earnings, Food & Beverage, Restaurants, Investing
Giving customers new ways to interact with McDonald’s (MCD) and making its food-prep processes faster and easier could be just what it takes to amp up sluggish sales at the world’s biggest burger chain.
Clearly, McDonald’s is in a funk. Last week’s uninspiring third-quarter report was rife with year-over-year declines in revenue, comparable-restaurant sales and profitability. It’s coming off four consecutive quarters of shrinking comparable-restaurant sales in the U.S., and a supplier scandal in Asia is making matters even worse overseas.
Mickey D’s 2.0
The McDonald’s menu has expanded over the years. Purists argue that widening its offerings is hurting the brand. Some have suggested that going back to basics — scaling down to its original burgers and nixing heart-healthy initiatives by going back to the old way it used to prepare its signature fries — is the answer.
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But McDonald’s isn’t going to go backward. If anything, its menu is going to get more complex. The chain talked up the Create Your Taste test during last week’s conference call. It’s bent on expanding the tech-driven customized burger platform where guests use touch-screen tablets to build gourmet burgers with nearly two dozen toppings — including tortilla strips, garlic aioli and guacamole. At four Southern California stores, diners don’t have to step up to the counter to pick up their orders or bus the trays off the table when they’re done. Employees perform those tasks. A burger runs $5.49 plus tax. “Bacon, the only extra that costs extra, adds 80 cents,” U-T San Diego reported.
This seems more like a gourmet burger joint, but that’s also the point. And McDonald’s said last week that it has “aggressive support of the franchisees” to roll out Create Your Taste in more markets next year.
Mobile Madness
Offering fancier sandwiches and pampering customers aren’t the only ways that McDonald’s is trying to grow sales again. The chain also wants to make it easier for the hungry to place orders before their even within sight of the Golden Arches.
McDonald’s has already been testing a multiple order point strategy overseas. Patrons at select stores in France and Australia can use self-order kiosks at the restaurants or place orders and pay for them with their mobile phones.
McDonald’s wouldn’t be the first fast-food chain to roll out a mobile ordering app. Cult fave Five Guys has had a mobile platform for a couple of years. Burger King Worldwide (BKW) introduced home delivery service two years ago, and earlier this year introduced a smartphone app that offers mobile coupons and in some cities mobile ordering.
There’s a lot of catching up to do at McDonald’s. Embracing technology to make the patron experience more convenient and efficient will bring guests back. Steps taken to automate prep processes that may help lower staffing requirements to the point where the company can drive profits — both to please investors and pay higher wages to satisfy activists — will follow. McDonald’s is embracing the future. It doesn’t have much of a choice at this point.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends McDonald’s. Try any of our Foolish newsletter services free for 30 days. For a list of high-yielding dividend stocks to complement your portfolio, check out our free report.
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Source: Investing
