A su­per-sized or­der

Mc­Don­ald’s looks to get peo­ple vis­it­ing more

The Guardian (Charlottetown) - - PERSPECTIVES - BY CANDICE CHOI

Mc­Don­ald’s is hop­ing to make a dif­fer­ence in its fu­ture seven sec­onds at a time.

The com­pany that helped de­fine fast food is mak­ing su­per­sized ef­forts to re­verse its fad­ing pop­u­lar­ity and catch up to a land­scape that has evolved around it.

That in­cludes ex­pand­ing de­liv­ery, dig­i­tal or­der­ing kiosks in restau­rants, and rolling out an app that saves pre­cious sec­onds.

Much of the work is on dis­play in an un­marked ware­house near the com­pany’s head­quar­ters in sub­ur­ban Chicago, where a blowup of a mo­bile phone screen shows the app launch­ing na­tion­ally later this year.

Mc­Don­ald’s es­ti­mates it would take 10 sec­onds for a cus­tomer to tell an em­ployee their or­der num­ber from the app, down from the 17-sec­ond av­er­age of or­der­ing at the driv­ethru, a dif­fer­ence that could help ease pile­ups.

Else­where at the In­no­va­tion Cen­ter, the dig­i­tal or­der­ing kiosk shows how cus­tomers can skip lines at the reg­is­ter.

“Five, 10 years ago, we were the dom­i­nant player in con­ve­nience, as con­ve­nience was de­fined in those days,” CEO Steve Easter­brook said last month. “But con­ve­nience con­tin­u­ally gets re­de­fined, and we haven’t mod­ern­ized.”

The push come as Mc­Don­ald’s Corp.’s stock has hit all­time highs as in­vestors cheer a turn­around plan that has in­cluded slashed costs and ex­pan­sion over­seas.

Yet the as­ter­isk on the head­lines is the chain’s de­clin­ing stature in its flag­ship U.S. mar­ket, where it is fight­ing in­ten­si­fy­ing com­pe­ti­tion, fickle tastes and a per­sis­tent junk food im­age.

In an in­creas­ingly crowded field of places to eat, the num­ber of Mc­Don­ald’s lo­ca­tions in the U.S. is set to shrink for the third year in a row.

At es­tab­lished lo­ca­tions, the fre­quency of cus­tomer vis­its has de­clined for four straight years — even af­ter the launch of a pop­u­lar “All-Day Break­fast” menu.

The chain that pop­u­lar­ized in­no­va­tions like drive-thrus in the 1970s ac­knowl­edges it has been slow to adapt, and is scram­bling to bet­ter fit into Amer­i­can life­styles.

RUN­NING TO KEEP UP

Lots of once-dom­i­nant restau­rant chains are feel­ing the pres­sure of peo­ple hav­ing more eat­ing op­tions.

An es­ti­mated 613,000 places were selling ei­ther food or drink in the U.S. last year, up 17 per cent from a decade ear­lier, ac­cord­ing to gov­ern­ment fig­ures. Su­per­mar­kets and con­ve­nience stores are of­fer­ing more pre­pared foods, and meal-kit de­liv­ery com­pa­nies have been ex­pand­ing.

“Bet­ter burger” places like Shake Shack and Habit Burger Grill don’t come close to Mc­Don­ald’s roughly 14,000 U.S. lo­ca­tions, but they’re grow­ing.

And even if Star­bucks and Dunkin Donuts don’t serve burg­ers and fries, they are among those pro­mot­ing food more ag­gres­sively.

“They’re still tak­ing cus­tomers from the same mar­ket pool,” said Nick Kar­avites, a Mc­Don­ald’s fran­chisee with 22 lo­ca­tions in the Chicago area and chair­man of a re­gional lead­er­ship com­mit­tee.

Richard Adams, a for­mer Mc­Don­ald’s fran­chisee who is now a con­sul­tant to those busi­nesses, has ques­tioned whether the chain can re­turn to the height of its pop­u­lar­ity in such a frag­mented mar­ket­place.

He also noted that many of the new of­fer­ings the com­pany is pur­su­ing, such as de­liv­ery, are al­ready avail­able at other places.

“They’re fol­low­ing the mar­ket­place,” he said.

Still, Mc­Don­ald’s needs to make changes to keep cus­tomer vis­its from fall­ing fur­ther.

“TURN­ING A VERY LARGE SHIP”

One main fo­cus is the driv­ethru, where Mc­Don­ald’s gets roughly 70 per cent of its busi­ness.

Cus­tomers who place or­ders on the mo­bile app, for in­stance, could also pull into a des­ig­nated park­ing spot where an em­ployee would bring out their or­der.

That would the­o­ret­i­cally ease back­ups at the drive-thru, which in turn might pre­vent po­ten­tial cus­tomers from driv­ing past with­out stop­ping dur­ing peak hours.

Then there’s the part­ner­ship with UberEats to of­fer de­liv­ery. Mc­Don­ald’s gives an undis­closed per­cent­age of the sale to UberEats, in ad­di­tion to a fee of about $5 that cus­tomers pay. So a risk is that de­liv­ery could draw from in-store sales, eat­ing into prof­itabil­ity.

So far, how­ever, Mc­Don­ald’s says de­liv­ery is bring­ing in new busi­ness dur­ing slower times at the roughly 3,500 lo­ca­tions where it has rolled out since the start of the year.

Ei­ther way, such changes aren’t likely to trans­form op­er­a­tions overnight, since most of Mc­Don­ald’s cus­tomers might pre­fer to or­der the way they al­ways have.

“That’s like turn­ing a very large ship,” said Kar­avites, not­ing the range of com­pany ef­forts in­tended to build sales over time.

At his re­mod­eled restau­rant in Chicago where de­liv­ery was re­cently launched, he said sales are al­ready climb­ing.

To bring more peo­ple in over the short-term, the com­pany is pro­mot­ing $1 so­das and $2 McCafe drinks.

Glass cases displaying baked goods are also pop­ping up in stores. And at about 700 lo­ca­tions, the com­pany is test­ing “dessert sta­tions” be­hind the counter where em­ploy­ees can make sun­daes topped with cake or brownie chunks.

Those sta­tions could even­tu­ally han­dle an ex­panded menu of sweets.

JUNK FOOD IM­AGE

At the same time, Mc­Don­ald’s is still try­ing to shake its im­age for serv­ing junk food, es­pe­cially since its ap­peal to fam­i­lies with chil­dren has long helped keep it ahead of ri­vals like Burger King and Wendy’s.

It’s made changes to its Happy Meal, and made a high­pro­file pledge to of­fer health­ier op­tions.

It plans to start us­ing fresh beef in­stead of frozen pat­ties in Quar­ter Pounders. But as other chains em­pha­siz­ing qual­ity or health keep emerg­ing, it may get harder for Mc­Don­ald’s to hold onto fam­i­lies or change per­cep­tions.

“The in­gre­di­ents aren’t fresh or clean,” Mary Beth Hol­land, who works in sales in the Chicago area, said about Mc­Don­ald’s.

Larry Light, a for­mer chief mar­ket­ing of­fi­cer at Mc­Don­ald’s, says the com­pany strayed in re­cent years by chas­ing cus­tomers who may have been go­ing to places like Chipo­tle, but that it is re­fo­cus­ing on burg­ers and fries. He thinks that will help get peo­ple vis­it­ing more of­ten.

“You can­not build an en­dur­ing, prof­itable busi­ness on a shrink­ing cus­tomer base,” Light said.

And Bern­stein an­a­lyst Sara Se­na­tore cited the changes the com­pany is pur­su­ing in rais­ing her rat­ing on Mc­Don­ald’s to “buy” in April.

“I wouldn’t un­der­es­ti­mate the power of scale,” Se­na­tore said.

CHARLES REX ARBOGAST/AP PHOTO

Sil­via Ruiz pre­pares a sand­wich at a Mc­Don­ald’s restau­rant in Chicago. The com­pany that helped de­fine fast food is mak­ing su­per­sized ef­forts to re­verse its fad­ing pop­u­lar­ity and catch up to a land­scape that has evolved around it.

CHARLES REX ARBOGAST/AP PHOTO

Michael Quigley, right, or­ders food at a self-ser­vice kiosk as Leni Bor­to­lato de­liv­ers a meal for a din­ing room guest at a Mc­Don­ald’s restau­rant in Chicago.

CHARLES REX ARBOGAST/AP PHOTO

Cus­tomers eat in a re­mod­eled din­ing room at a Mc­Don­ald’s restau­rant in Chicago.

CHARLES REX ARBOGAST/AP PHOTO

Mc­Don­ald’s is try­ing to shake its im­age for serv­ing junk food and has made a high-pro­file pledge to of­fer health­ier op­tions.

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