McDonald’s, is working to turnaround its business under CEO Steve Easterbrook, making the menu simpler, improving service times and raising worker wages.
Same-store sales, the numbers for stores open at least a year, rose 5.7 percent in the United States in the quarter that ended December 31, and 5 percent on a global basis. It was the strongest gain in such sales in almost four years.
The launch of all-day breakfast has been one of the company’s big-time measure under Easterbrook. The decision to make select items like the Egg McMuffin available around the clock created a wave of national media coverage. Fans of McDonald’s breakfast had long complained of being unable satisfy their cravings later in the day. The menu change clearly has paid off for Mickey D’s.
CNN Money reported that it was all part of Easterbrook’s strategy to turn McDonald’s into a “modern, progressive burger company” — marketing jargon for tastier and fresher food.
Easterbrook said the following in the company’s earnings release Monday.
“We took bold, urgent action in 2015 to reset the business and position McDonald’s to deliver sustained profitable growth.”
The chain has made new initiatives designed to make its food appeal to health-conscious and sustainability-minded consumers who, in recent years, were attracted to fast-casual chains such as Chipotle, Shake Shack, and Five Guys. McDonald’s is trying to win back some of those customers with pledges to things like cage-free eggs and reduced antibiotics in chicken.
McDonald’s recently introduced mozzarella sticks and is considering launching mac and cheese sweet potato fries. The company also introduced a new value menu, the McPick, which gives customers a choice of two items from a menu of four for $2 total.
Neil Saunders, CEO of research firm Conlumino, said in a report Monday that the new offerings — as well as all day breakfast — has been “successful in attracting back lost customers, especially over the important lunchtime period.”
According to a CNBC report, Jeffrey Bernstein, senior restaurant analyst at Barclays, said.
“As we enter 2016, we expect continued positive top-line momentum across all segments. People can’t get enough of the Egg McMuffins in the afternoons and the evenings. Breakfast and value I think would be the key drivers, and as we move into 2016, I’m sure they’ll refocus on some premium products as well.”
R.J. Hottovy, senior restaurant analyst at Morningstar Global, said the following.
“I think the key takeaway with the all-day breakfast is the fact they were able to roll it out in a matter of six months. That wasn’t something we saw under previous leadership, and I think that bodes well for a lot of the new initiatives.”
The chain’s newly vigored business can also be seen as an evidence to the long lasting popularity of the Egg McMuffin, arguably the most iconic breakfast sandwich in the world. It was first served in the early 1970s and caught on so quickly that it helped popularize the entire breakfast sandwich category. Today, demand for it is such that the chain buys more than 2 billion eggs per year in the United States alone, or almost 5 percent of all eggs produced in the country.
“It’s one of the oldest items they’ve had on their menu, and it’s still one of the most popular,” said Darren Tristano, who is the president of Technomic, a food industry market research firm. “Selling it all daylong was a no-brainer.”
Analysts researched into the McDonald’s app, which became available for downloading in July but was not advertised until October, and how it was affecting business. On the conference call Monday, Mr. Easterbrook said that seven million people had downloaded the app, though fewer went on to register. Those who register, sharing their information with McDonald’s, become eligible for special deals, like getting a sixth cup of coffee free after buying five.
McDonald’s has been in a turnaround that Mr. Easterbrook started when he became chief executive last March. The company changed its structure to try to encourage the exchange of ideas around the globe, and it announced it would sell off some 3,500 of its company-owned stores. Such steps are expected to reduce its costs by $300 million by 2018.
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