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McDonald's turnaround plan: 'Get closer to the customer'

McDonald's CFO said the company is behind some competitors in the digital space and is therefore investing at an 'accelerated rate' to get enhancements to the market.

November 19, 2014 by Alicia Kelso — Editor, QSRWeb.com

McDonald's has already put its "Experience of the Future" plan into motion in a handful of markets. The company is banking on this plan to work through a challenging environment and to turn sales around after a year of comp decreases.

CFO Pete Bensen and CBO Steve Easterbrook offered updates on the company's progress during Morgan Stanley's Global Consumer & Retail Conference today.

Bensen said, despite recent slow sales trends, the opportunity for growth remains. McDonald's, which serves about 70 million global customers a day, has less than 10 percent of the global market share.

"We're still growing the business. The system is aligned around taking the right steps toward driving sales," he said. Those steps, he adds, mean "getting closer to the customer in everything we do."

McDonald's is embracing "consumer-led" innovation around its menu, its service and its digital presence, and continues to build on key investments that have already been made, such as modernized restaurants, updated POS systems and mobile technology.

Many of the newer initiatives are already in place in markets such as France and Australia – such as self-order kiosks and mobile ordering.

"These are aimed at delivering a more personal, convenient and enjoyable experience," Bensen said, adding that the US system is moving quickly to implement new initiatives that, "create a flatter, more nimble organization that ensure key business decisions are made closer to the customer."

The brand's marketing approach is being revamped, with local campaigns moving to the forefront and created in response to individual market preferences. They will continue to be complemented by national messaging around food quality.

McDonald's will also simplify its menu in 2015 to make the ordering process is easier for both customers and crew members. This simplification will create better opportunities for local markets to pull products from the pipeline that best fit their customer preferences – products like the chorizo burrito and mozzarella sticks.

"We are strengthening our planning with deeper customer insights, bolder marketing that cuts through the clutter, more consistency in our affordability platform and greater focus on our core menu," Bensen said. 

Bensen said McDonald's will move quickly, but admitted it will take time for customers to "give notice and credit with increased visits."

Easterbrook piggybacked off of Bensen's commentary, stating that the notion of getting closer to the customer is "what we're focused on in everything we do." With deeper customer data, McDonald's is building initiatives around three key focus areas: menu, brand and digital.

Menu:Easterbrook said McDonald's will remain committed to its core products, which generate about 40 percent of sales, but will also place a greater emphasis on innovation, particularly with its Create Your Taste initiative. Create Your Taste is an in-restaurant service option that allows guests to customize their quarter pounder burgers using kiosk or tablet ordering technology, with the orders then delivered to their table. Easterbrook said this strategy meets "a large societal trend for personalization and customization."

He also attests it will not trip up operations or speed of service at restaurants, thanks to the self-service ordering process.

"We are using technology to power the order rather than customers standing at a counter and going through a list of ingredients," he said.

After the order is placed, it is sent to the back of the house where an individual grill and cell in the kitchen prepares these customized burgers away from the other orders to avoid disrupting the kitchen stream. And, by customizing the product, McDonald's is offering one item with "hundreds of combinations of choices."

"This means we can take some of the existing items off the menu and simplify what our existing menu looks like," Easterbrook said. "We can simplify what's become a slightly complex menu, which helps the core of our day-to-day operation. We are very sensitive it doesn't interfere with existing efficiencies and the power of technology is allowing us to do this in a sophisticated way."

Brand: McDonald's main objective from a branding focus is to build greater trust.

"It is critical we move the needle on this," Easterbrook said. Last month's launch of the "Our Food. Your Questions" campaign is a major component of this strategy and has so far had a "high impact start," with 13,000 questions answered online.

"This isn't just about dispelling myths, but getting a much deeper understanding on customer issues and how to better address them," Easterbrook said. "We know we have an opportunity to gain greater credibility around our food quality as a way to keep moving into bigger, bolder areas of our menu, much like we did with the McCafe."

Digital.The final priority area is digital and McDonald's plans to use technology to move from mass marketing to mass personalization. Its digital strategy is global and will be used with an objective of "revolutionizing how the customer experiences us," Easterbrook said.

This includes digital commerce, loyalty, advance ordering and more.

"Digital commerce holds huge potential for us in a myriad of ways to make the brand easier to use, build greater loyalty and drive more transactions," Easterbrook said.

McDonald's collaboration with Apple's Apple Pay platform was its first "big move" in this area. The company also plans to leverage digital to deliver music, entertainment, social media content and "more modern, more engaging play for kids," Easterbrook said.

McDonald's global mobile app will be fully deployed in Australia by the end of this year, and rolled out in the US next year. It will initially include promotions and payment, followed by ordering and loyalty capabilities.

The company splits its domestic market up into 22 regions and will start its digital rollout in three or four of those to gather information before expanding into other regions.

"We shouldn't be limited by our size," Easterbrook said. "Once we fine tune it, we can move quickly. We can move quickly when we have the right solution in place."

Moving quickly may be a necessity – Bensen admitted that McDonald's is behind some competitors in the digital space and is therefore investing at an "accelerated rate" to get enhancements to the market. 

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