While Chipotle Falls, McDonald’s Changes Menu, Eyes Huge Profits
Changes to McDonald’s menu have led to some of the food giant’s biggest profits this year, a sign which might herald its long-awaited resurgence. The world’s largest fast food hamburger chain will report its fourth-quarter 2015 sales and earnings on Monday, and Wall Street analysts are predicting it might be their best U.S. sales performance in almost four years.
McDonald’s recent history has been fraught with disappointing sales and dwindling profits, but this may finally signal a comeback for the world-famous company, whose name has become synonymous with fast food.
According to a report by the Chicago Tribune, much of the recent profit gains, which are predicted to carry over into early 2016 as well, can be attributed to menu changes. McDonald’s has always played around with menu changes, but recently the company has taken things to a whole new level.
The Tribune reported on how McDonald’s has streamlined the process of its famous menu changes to the point where it can change the menu in thousands of stores in just a few month’s time.
“There was a time when McDonald’s took years to introduce menu items. Now, under the leadership of CEO Steve Easterbrook, it’s often just months. McDonald’s launched all-day breakfast in October after only nine months of planning.”
The average McDonald’s menu has about 120 to 140 items, including all available size options. Out of these, about 100 are specific to a region and only 40 classic items, such as Big Macs, chicken nuggets, McChicken, and Filet-O-Fish, are required of franchises.
Typically, McDonald’s sends foods to regions where they will be the most popular. Examples, according to the Tribune’s report, include chicken items in Atlanta, coffee in Northeastern states, salads on the West Coast, and burgers and sweet potato fries in Texas.
As reported by Inquisitr, McDonald’s is also currently testing Monster brand energy drinks in Illinois, and macaroni and cheese in Ohio. Restaurants nationwide were introduced to the new mozzarella sticks this year. The dollar menu is also being phased out in favor of a “pick 2 for $2” deal, and in most locations there is now an All Day Breakfast menu.
According to Investor’s Business Daily, the gains for more classic restaurants like McDonald’s and Wendy’s against more trendy fast-casual eateries were also helped by the financial beating Chipotle has taken following the outbreaks of E. coli and norovirus at several of its locations.
“While Chipotle’s (CMG) stock price has lost more than one-third of its value since Oct. 13 — and the chain plans to close more than 1,900 stores for a few hours on Feb. 8 for a companywide meeting on food safety — McDonald’s (MCD) shares are up more than 10% over the same period.”
Shares for McDonald’s rose more than 25 percent in 2015, beating out long-time rival Burger King, as well as Wendy’s and KFC. McDonald’s expects sales to grow us much as 5 percent across the map, income to grow as much as 7 percent, and a double-digit return on invested capital. Investor’s Business Daily also reported that CEO Steve Eastbrook revealed his plan to accelerate the pace of McDonald’s locations franchising.
“My priorities for McDonald’s as a modern, progressive burger company are threefold: driving operational growth, creating brand excitement and enhancing financial value,” Easterbrook said. “For too long we’ve asked customers to adapt to us. A big part of turning that around is giving customers more choice and always adapting to meet their needs.”
McDonald’s has also announced they will raise wages by 10 percent to pay at least $1 more than the local minimum wage at U.S. restaurants it operates. A corporate press release from McDonald’s official website explaining the company’s future plans for growth can be found here.
[Photo by Justin Sullivan/Getty Images]
