McDonald’s makes supersized effort to turn fading popularity
ROMEOVILLE, Ill. — 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 drive-thru, 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 comes as McDonald’s Corp.‘s stock has hit all-time 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 numberof 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.
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 percent 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.
McDonald’s has a new 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.
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.
It has made changes to its Happy Meal, and made a high-profile 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.