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Speed of service a priority for McDonald's in 2014

The company will focus investments on operational efficiencies, training initiatives and restaurant remodels.

November 15, 2013

Flat sales aside, all eyes continue to be on McDonald's for its menu and marketing leadership that led to the chain's $36B in sales last year. That's why we listened in on McDonald's Investor Day webcast Nov. 14.

Here are some highlights from the event:

Staying the course

CEO Don Thompson said the company will continue to follow its Plan to Win — put into place in more than 10 years ago — that includes optimizing the menu, modernizing the customer experiencing and broadening accessibility to the brand.

"Our goal is to ensure that we are adapting to keep pace with the changing marketplace," he said. "We're intent on strengthening our brand by running even better restaurants and delivering the best food and beverage offerings. We will accomplish this by accentuating our key brand attributes, modernizing our connection with the more than 69 million customers who visit McDonald's each day, and optimizing our globally diversified restaurant portfolio."

2014 optimism

Despite a flat-ish performance throughout 2013, McDonald's is more bullish about the New Year, predicting systemwide sales growth of 3 to 5 percent, and operating income growth of 6 to 7 percent.

"Given the resilience and stability of our business model, we believe that our average annual constant currency growth targets remain realistic and achievable and keep us focused on making the best decisions for the long term," Thompson said. "While the fundamentals of our business have not changed, when we look at the market dynamics for 2014 we do not see material changes versus 2013. As such, we are focused on those things within our control — evolving to meet changing consumer preferences, investing to build demand, and maintaining our focus on execution and operations excellence."

Investment plans 

To support these priorities, McDonald's plans to spend about $3B in 2014 for reimaging and openings. The outlook is to open about 1,500 restaurants and reimaging 1,000 current restaurants in the brand's modern design. Part of this expansion will include about 350 to 400 new McCafé locations. The company said coffee sales are up 70 percent since 2009 and that it holds about 13 percent of the U.S. coffee market share.

McDonald's is also planning to experiment with a third drive-thru window to speed up service. The "Fast Forward Drive-Thru" allows customers to drive to a third stop if their orders aren't ready. It will be featured in new and renovated restaurants starting in 2014. The drive-thru makes up about 70 percent of the chain's sales.

U.S. president Jeff Stratton said McDonald's has struggled with service speed, particularly during the lunch daypart. Plans are in place to improve back-of-the-house efficiencies, and slow down new menu rollouts. The pace of product introductions has been too fast, Stratton said, which adds complexity to operations.

It was also reported this week that the chain is testing a new build-your-own custom burger initiative in Southern California and Illinois, as part of a push into the premium space. Additionally, McDonald's is exploring ways to expand its accessibility through grocery store kiosks and longer breakfast hours.

Finally, training will be prioritized next year. Each restaurant will adopt a new customer feedback system in the early part of the year, allowing guests the ability to provide feedback in real time.

"The McDonald's System has an infrastructure built for growth, and we are well-positioned to seize the sizable opportunities that exist in the Informal Eating Out industry," Thompson said. "Today we are investing in our people, our restaurants and our technology to capitalize on those long-term opportunities that will make McDonald's even better and bigger in the future."

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