After 50 years of operation, McDonald ’ s is revitalizing its products, and pushing innovation
through a variety of initiatives. This foodservice giant with more than 30,000 restaurants
in 100 countries provides food to nearly 50 million customers each day, but decades
of expansion, sales growth, and profi ts made the burger giant complacent. By focusing
on getting bigger, not better, the company stumbled in 2002, recording its fi rst losing
quarter. By 2003, U.S. sales had fl attened, as many consumers were turning to healthier
options and restaurants with more upscale menu items, a segment sometimes referred
to as “ fast – casual ” . Morgan Spurlock ’ s fi lm Super Size Me , released in 2004, also seriously
diminished the public image of the quick – service chain, as moviegoers watched Spurlock
become ill and gain 25 pounds after eating only McDonald ’ s food for one month.
With pressure to get back on track, it was time for McDonald ’ s to rethink the business.
The chain devised a recovery strategy that included new menu items, redesigned restaurants,
and a focus on the consumer experience. Through a program titled “ Plan to Win, ”
McDonald ’ s focused on making a deeper connection with customers through the fi ve
business drivers of people, products, place, price, and promotion. Using its own fi ve P ’ s,
the company is developing and refi ning new strategies to deliver value, offering product
variety, developing updated and contemporary stores, balancing the delivery of value pricing
with more expensive items, and marketing through bold and innovative promotions.
Execution of this strategy has included mystery shoppers and customer surveys, along
with grading restaurants to help the company deliver on its people goals. New menu
items like the Fruit & Walnut Salad in the United States and deli sandwiches in Australia
are part of the commitment to serve high – quality products to satisfy customer demand
for choice and variety. Restaurants are staying open longer, accepting credit and debit
cards, enabling wireless Internet access, and even providing delivery service in parts of
Asia. As part of the program, franchisees and suppliers are asked to provide their opinions
and ideas on facility design, while the company benchmarks retail leaders, such as
Crate & Barrel, to help produce cleaner and smarter restaurants. The company is testing
small handheld devices to use on what it calls “ travel paths, ” a process for checking
operational failures such as the temperature inside the refrigerators. Experiments with
a new grilling concept from Sweden, which grills burgers vertically instead of horizontally,
offers space – saving possibilities for the chain. Product offerings like the McCaf é ,
a concept developed in the Australian market that provides gourmet coffee inside 500
existing restaurants, are proving to be successful.
The trouble experienced in the early part of the millennium has abated, and executives at
McDonald ’ s have declared success after several years of progress under the Plan to Win.
Company revenues are up, and the fi rm plans to remain focused on its core business. One
indication of its commitment to fast food was the divestiture of its seven – year ownership
stake in Chipotle Mexican Grill, a highly successful fast – casual burrito chain. With the
sale of around 5 million shares of Chipotle stock, the burger maker is now refocusing on
Brand McDonald ’ s.
Attracting more customers to McDonald ’ s remains its goal for growth. In the U.S.
market, the strategy is to leverage menu innovation; in Europe, upgrading the customer
experience and enhancing local relevance have driven management efforts; and the
Asia/Pacifi c, Middle East, and Africa markets have focused on building sales through
extended hours. The question remains whether focusing on the core business will yield
maximum return. At McDonald ’ s, the executives are betting on the core brand and hoping
that this strategy will pay off.