McDonald's unveils growth initiatives

by Erica Shaffer
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 McDonalds
Curb-side pickup, mobile pay and partnerships with delivery services to play a significant turnaround strategy.
 

OAK BROOK, Ill. – McDonald’s Corp. executives detailed a customer-centric growth strategy during the company’s annual investor conference. Trading in McDonald’s shares was halted while the company unveiled new initiatives that include curb-side pickup and mobile payment options.

“Building on the momentum established in 2016, the company is beginning to shift focus from revitalizing the business to longer-term growth,” McDonald’s said in a regulatory filing with the Securities and Exchange Commission (SEC). “The company will move with increased velocity to drive sustainable guest count growth, a reliable long-term measure of the company’s strength that is vital to growing the company’s sales and shareholder value.”

As part of its strategy for long-term growth, McDonald’s is accelerating its focus and investment in delivery platforms as a way to expand customer convenience. Various pilot programs are underway in the United States, Europe and Asia, and McDonald’s plans to act quickly to scale those programs that deliver results.

Stronger partnerships with digital technology vendors also will drive customer convenience by simplifying order and payment options. McDonald’s expects to improve the quality of service at its restaurants through additional functionality in its mobile app, self-order kiosks and other technologies that will enable table service and curb-side pickup, the company said.

On a segment basis, McDonald’s aims to increase customer traffic at its restaurants in the US by focusing on food taste and quality with the launch of its Signature Crafted offering, which features premium burgers made with authentic ingredients that diners can customize. “In addition, the US will remain focused on strengthening its customer-relevant value proposition,” the company said. “The US expects to launch its mobile order and pay functionality as well as curbside pick-up across all traditional restaurants in the fourth quarter 2017.”

In International Lead Markets, the goal is to deepen connections with consumers through enhanced menus, accessibility and experience, McDonald’s said. “The segment is focused on providing quality, great taste, value and choice across the entire menu. Entry-level value programs appeal to teens and young adults, while other platforms provide budget-conscious customers affordable meal bundles.”

In addition to targeted value propositions, modernized cooking and service platforms will enable restaurants in the segment to expand premium chicken and beef offerings along with locally relevant menu items. “The segment will also remain focused on enhancing and expanding the McCafé coffee brand and pastry offerings,” McDonald’s said.

Driving operational growth in existing restaurants while targeting new restaurant development and refranchising initiatives are top priorities in the company’s High Growth segment.

Refranchising opportunities, including the sale of certain markets to developmental licensees also is a focus of the company’s Foundational Markets.

McDonald’s acknowledged stiff competition from other players in the quick-service restaurant segment that has resulted in the loss of customers. To address this, the company plans to renew its focus on areas where the McDonald’s already has a strong foothold: family occasions and food-led breakfast.

McDonald’s strategy for converting casual visitors to committed customers includes leveraging the McCafé coffee brand and enhancing snack and treat offerings.

Finally, McDonald’s will continue to build upon its investments in Experience of the Future (EOTF), which focuses on restaurant modernization and technology.

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