The highest-paid restaurant chain in the world has a roadmap for even deeper growth.
On its December investor day, the first in three calendars, McDonald’s added a “fourth D” to its Accelerating the Arches strategy, introduced in 2020. “Development” has joined “home delivery”, “drive-thru” and “digital”. . » While this doesn’t sound revolutionary for a chain with 40,000 locations worldwide, the truth is that McDonald’s hasn’t noticed an expansion in the U. S. I have been in the U. S. for some time now. Its net expansion of six retail outlets last year marked the first national expansion in 8 years. From 2020 to 2021, the logo declined across 244 outlets. Last year, there were 164.
Given that McDonald’s ended 2023 with 13,449 restaurants in the U. S. , the numbers were relatively insignificant, but things gradually began to replace the pandemic. There were as many as 250 new sets in the works. Notably, McDonald’s seemed to stick to demographic trends in the South and Southeast.
The December announcement projected a gross open rate of 1,000 in markets operated in the U. S. By 2027, McDonald’s would take McDonald’s from about four to 20,000 places. That’s a new net annual growth of four to five percent. The addition of 9,000 restaurants will occur: 900 in the United States, 1,900 in IOM (markets such as France, Australia and Canada) and 7,000 in IDL (including China).
MORE: McDonald’s Chris Kempczinski to take on the roles of CEO and president
It projects McDonald’s to 14,000 to 14,000 nationally.
Chief Financial Officer Ian Borden, speaking recently at UBS’s Global Consumer and Retail conference, said the logo has become ingrained in anticipation. Over the past decade, he said, the U. S. population has grown 11 percent. McDonalds? About four percent. ” So we haven’t even kept pace with population growth,” he said, “[and that] doesn’t even take into account the fact that I think our logo can penetrate in other ways, more broadly, into some of the communities that we’re in. So I think that’s what excites us about this opportunity.
McDonald’s hasn’t stood idly by over the years. The chain has invested $9 billion in a formula to modernize its domain (the so-called delight of the future). In August 2018, it announced, along with its franchisees, that it planned to invest billions to modernize the maximum U. S. footprint by 2020. This was long before anyone knew that a global crisis would shut down canteens and that hard work and demanding margin situations would push brands toward omnichannel expansion in the form of kiosks and virtual connectivity. The redesign included kiosks, revamped counters for new table service, virtual menus, parking spaces designated for curbside pickup via mobile ordering and payments, and expanded counters and storefronts. All the modernizations resulted in an increase in sales of around 5% at the beginning.
Borden said the U. S. is now at 98 percent. “And that would possibly sound like a green fee, but a lot of other people in the industry are nowhere near being able to do that,” he said. “Higher interest rates, lower corporations, I think it’s pressure from a monetary or earnings perspective. So if you tried to do that now, it would be incredibly harder to do it in the current context than when we made it happen.
In other words, McDonald’s is content not to try to upgrade its assets given the burden it has in the current climate. The unique and serendipitous fact that he has been at the forefront means that he can do anything that is not possible. T: Grow in a tangible way. This is as true for McDonald’s in recent years as it is for the rest of the industry.
This also applies to the attitude of virtual levers that are already in a position to satisfy consumers’ conversion desires.
Borden said that if McDonald’s had been asked in 2020 about its virtual spending, the company would have been satisfied. “So we’re focusing a lot on how we can bring virtual to life at scale with an enterprise mindset,” Borden said.
“And I think the fact that we now have 150 million unwavering members in our 50 most sensitive markets is a pretty smart indication of the progress being made in the digital realm,” he added.
McDonald’s now claims around $20 billion in system-wide sales from its members (this includes the 70 million active and unwavering users in China). The aim is to increase this budget to $250 million by 2027 and provide $45 billion.
McDonald’s virtual business accounted for more than 40% of sales in its six major markets last quarter, equivalent to about $9 billion. The chain is preparing 55,000 orders worldwide for anytime delivery, and consumers will be able to order through the McDonald’s app in five primary markets (the goal is for 30% of home orders to come from the mobile app by 2027).
In the U. S. alone, where the loyalty program was introduced in July 2021, the number of active users has risen to 34 million. Borden said McDonald’s ability to ignite on a giant scale is only now beginning to be seen. “We’re doing a lot of work on how to start activating those relationships on a much more private level, which I think will generate great value for consumers and for us, and we’re ahead of the curve,” he said.
In its investor day, McDonald’s explained how it will create third-generation platforms in its industry. It evokes a platform for the general public (loyalty). “And we will have, by the end of 2027, one of the largest customer platforms of all time. industry in the world,” Borden said.
“Why is the unbreakable vital?” He later added, “Loyalty is vital because unwavering consumers stop in more places and spend more over time. And I would say we’re already seeing that, very convincingly, but with what I would say are pretty fundamental functions today.
Where is McDonald’s and loyalty going? Borden said it will get to the point where the company will have the ability to interact with consumers intuitively based on their individual knowledge to “provide them with what they need, when they need it, where they need it and how they need it. “
“And that’s going to be difficult because it’s going to continue to generate more prices for the customer and it’s going to continue to generate more prices for the organization,” Borden said. “And I think the ladder is starting to unlock capabilities. “”.
Imagine partnerships with other logos and how this can be part of McDonald’s loyalty program. And the benefits that McDonald’s has because of the length and price of the logo. “I’m thinking about things like gamification, where you can start to unlock a lot of things. “There’s a lot of work to be done. It will take time to develop all of those features. But I think we have a transparent vision of where we need to be and a roadmap of how we’re going to start bringing those features to life.
Next, McDonald’s referred to a restaurant platform. This is explained by having “the simplest and most effective restaurant operations platform in our industry that brings all the modern features and technologies to our employees and restaurants,” Borden said, “and allows them to do their jobs more smoothly and effectively and focus on delivering a better visitor experience.
He added that McDonald’s would expand the cloud to 40,000 restaurants worldwide as part of the effort. This is based on the logo revealed above. McDonald’s announced in December a strategic partnership with Google Cloud to integrate the cloud generation and apply generative AI responses in restaurants.
The general concept is that innovation in automation for appliance brands would get a boost, allowing general managers to temporarily identify and implement responses to reduce business disruptions. In addition, the generation reduces complexity for equipment and effects on fresher, hotter food.
To address Borden’s point, McDonald’s needs to use Google Distribute Cloud, a combination of hardware and software, and expand it to tens of thousands of restaurants. Operators will then be able to operate cloud-based software and their own software and artificial intelligence solutions. on-site, as needed.
McDonald’s will be the largest foodservice store in the world to use the new Google Distributed Cloud features. These “thousands” of restaurants are expected to start receiving hardware and software upgrades next year.
A committed Google Cloud team in Chicago will also work near McDonald’s global innovation hub, known as Speedee Labs.
It’s not over yet, either. Starting this year, McDonald’s plans to roll out universal software that can run all virtual and visitor platforms, from the mobile app to in-store loyalty kiosks. The chain said this would allow for faster innovation and stronger performance.
More knowledge shared more opportunities to power custom AI solutions, McDonald’s said.
“We need to have a business platform that starts to leverage innovation in terms of speed and efficiency. . . and to bring our knowledge and analytics capabilities to the scale of the business that we have,” Borden said. “So when you think about those 3 platforms, that means we’re going to invest particularly over the next few years in generation and virtual. And we believe that generation and virtual are a game of scale, which means you’re on a scale merit. ? Because we can invest more in our industry than in anything else, because of our size and the point of resources that we have.
The State of the “Big Burger”
One of the most egregious statements made through McDonald’s in recent months took place in early February. CEO Chris Kempczinski, on the chain’s fourth-quarter results, mentioned “that low-income consumer” as the next battleground for quick service. Notably, McDonald’s said it had witnessed pressures from the cohort ($45,000 and under) and admitted that the fact that dining at home was quite affordable had eroded traffic in this category, which has long built the backbone of fast-food across America, a segment that has prices on “transitional meals” and the ability to make money on the low end of the bar are still more ingrained in the culture than BLS statistics.
But heading into the fourth quarter, grocery and market food prices had fallen for 16 straight months. The household food consumer price index fell 0. 1 percent from November to December. Out-of-home food consumption rose 0. 3 percent and 5. 2 percent above year-on-year measures.
Borden said it’s a challenging environment. People are being affected by inflation in all spending spaces. Rising interest rates are also taken into account. Specifically for low-income customers, Borden said, there are some additional dynamics at play. -19 Savings that other people have been tapping into have “largely disappeared,” he said. And then, as Kempczinski pointed out, the tug-of-war between at-home and cookout went back to the old norms. “Which means some of the consumers are simply choosing to eat at home more often,” Borden said.
However, this has happened because menu costs in this category have risen to combat inflation, and while they are slowing, they remain particularly consistent from 2019. Restaurant menu costs rose 0. 1% in February and have risen 4. 5% over the year. This figure is 1% for food delivery. Full-service was up 3. 8 percent last month and express service was up 5. 2 percent.
“If you think about the casual dining sector, chances are that this year we’re seeing negative traffic from an overall industry standpoint, because of that dynamic on a comparable basis,” Borden said.
He added that McDonald’s remains confident in the positioning of its logo.
“We have excellent value for money and a leading position in affordability in the U. S. industry,” Borden said. “But as we mentioned before, the important thing, I think, is that the landscape is more challenging as it evolves, is that you pay attention to the customer and look at what they expect. “
This last point has created an attractive abyss. Borden said low-income consumers expect more features and will offer higher prices than before. When it comes to national businesses, 90% of McDonald’s restaurants in the U. S. are responsible for the use of McDonald’s restaurants. U. S. airlines now offer breakfast or rest of the day packages for less than $4.
That’s an attractive price, Borden said, but it’s something McDonald’s hasn’t been actively talking about until 2024. The logo should ensure that consumers know what is available and think of McDonald’s when choosing prices, he said.
And let’s not limit ourselves to the virtual leverage of 34 million active loyalty members that you can instantly depend on. ” We’re going to be much more active in how we bring virtual to life and in the offerings we offer consumers to make sure we’re compelling,” Borden said.
“I mean, I think the headline is that we’re going to put a lot of effort into making sure that we continue to earn that right, and even consumers, who I think are making more informed choices, that we’re trying very hard to earn it. correct visits,” he said. And then when those consumers come, to make sure we’re giving them a wonderful experience, they’ll need to come back the next time they can. “
Speaking of price and its ever-changing composition, McDonald’s main menu accounts for 65% of the entire system’s global sales. COVID, Borden said, reminded him of that to the logo. That’s why the menu was reduced and changed to $17 billion. Stock price (beef, chicken, and coffee).
McDonald’s is the world’s largest player in the beef industry. Borden said the logo has gained market share since 2019 “pretty consistently” across all markets, but there are some attractive opportunities.
“Best Burger,” a platform focused on preparation and quality improvement, is offered in 70 markets. This will flood the rest of the formula until the end of 2026. Borden said this will lead to “significant improvements” in quality, which are the two main drivers of customer visits to restaurants.
But when an opportunity presented itself, he did it with a “big burger. “
“It’s a clever example of how I think we perceive customers’ desires more as they should be and then deal with those desires. I’ll call it a one-way approach,” Borden said.
In the past, McDonald’s would walk behind empty spaces with “premium burgers” because it thought that’s where the customer was looking for them to pass. “Which is wrong,” Borden said. We didn’t make it. “
A broader, more satisfying offering is what other people are asking McDonald’s for. “This opportunity is important,” he said. This is consistent across many of our core markets. “
McDonald’s has hinted that it has innovated with some products in the pilot phase. You’ll test them on two or three “market zeros. ” If they work, McDonald’s will tailor a solution to this opportunity on a global scale, whereas before it would have noticed that it is looking to make its mark in 20 other markets and in 20 other ways, Borden said. “And then you don’t have the ability to generate global capital that you can manage at scale. “
Chicken is another bucket. First, McCrispy was tested in a few markets to meet an unmet need of visitors. From 2010 to 2023, according to the U. S. Department of Agriculture, the U. S. Department of Agriculture and the U. S. Department of AgricultureIn the U. S. , annual bird intake in the United States increased from an average of 82. 8 pounds per capita to 101. 7 (projection; it was 100. 6 in 2022). Beef fell in this same window, from 59. 3 to 57. 9.
Globally, the length of beef is twice as long as a category.
Unsurprisingly, McDonald’s has grown rapidly and McCrispy is now a billion-dollar logo in more than 30 markets around the world. The chain’s poultry category now accounts for $25 billion in annual sales systemwide, tied with beef.
The chain plans to increase the bird exchange point through 2026 through a further expansion of the McCripsy platform in wrappers and offerings. McSpicy is also growing. ” We believe our market share is under-indexed,” Borden said.
He also noted that McDonald’s is not satisfied with its progress in the coffee sector, despite being the second largest player in the world. “We have a significant percentage of the coffee, but we haven’t made as steady progress as we thought,” Borden said, “And we think the biggest opportunity is that we’re not delivering consistent quality taste and execution. Again, taste and quality are the two main determinants of visitor visits. Maybe a small example of why we have another hundred coffee machines in our corporate today.
It’s hard to deliver a consistent experience without streamlined preparation. “We’re going to bring this coherence to life at scale. And we believe that by doing so, we can have a significant effect on taste and quality for consumers and deliver a greater experience. “
Papa John’s International, Inc. announced that Rob Lynch, President and Chief Executive Officer, will leave Papa Johns to take on another role as Chief Executive Officer. The Board of Directors has appointed Ravi Thanawala, current Chief Financial Officer of Papa Johns, as interim Chief Executive Officer effective today. To ensure a smooth transition, Lynch will continue to play an advisory role until April [. . . ]
ParTech has that A
To create a unified experience for visitors across all of its virtual platforms, Jersey Mike’s Subs, known for its fresh-sliced and fresh-grilled sandwiches, redesigned its site: jerseymikes. com. Designed to visually mimic Jersey Mike’s popular mobile app with its laid-back design. Returning to the beach environment, it will offer enhanced features such as a streamlined order flow, a new delivery service [. . . ]
Krispy Kreme is helping enthusiasts “bloom happily” with their circle of family and friends by introducing a new Spring Minis collection. Starting March 19 for a limited time at attractive retail stores across the U. S. Krispy Kreme’s new Spring Minis come in four flavors with some Easter eggs: “We’re excited to help our enthusiasts ‘bloom happily’ with those new Spring Minis [. . . ]
Philly’s Best, Southland’s iconic sandwich shop that has satisfied Philadelphia’s true culinary cravings since 1992, invites the citizens of Southern California to sign up to celebrate their favorite holiday, National Cheesesteak Day, on March 24. From March 16 to 23, cheesesteak Philly’s Best lovers and enthusiasts can head to the brand’s Instagram page (@eatphillysbest) [. . . ]