There are still consumers who vow that they won’t eat at McDonald’s, but the fast-food giant appears to be pleasing an ever-larger number of palates.
The company on Tuesday reported a better-than-expected Q2 global comparable-sales gain of 6.6%, its eighth straight quarter of positive same-store sales increases. Customer visit counts rose 3%.
In its top market, the US, a center of focus, sales at McDonald’s owned and franchised restaurants operating for at least 13 months rose 3.9%. That’s a sharp contrast with the underwhelming performance in the US restaurant industry, which according to TDn2K’s latest data hasn’t seen one month of positive same-store sales since February 2016 through June this year.
Overseas, the gain was also consistent, and the growth did not rely solely on increases in emerging markets such as China. In fact, the company saw sales and traffic gains in every one of its top nine markets for the first time since 2008, CEO Steve Easterbrook said on the company’s earnings call Tuesday. For instance, Canada saw its highest sales growth in the past five years, he said.
Under Easterbrook, who became CEO in 2015, McDonald’s has moved to respond to consumers’ increased preference for healthier, natural, and environmentally conscious food, including using more cage-free eggs, sustainable beef and a plan to use fresh beef instead of frozen meat for its Quarter Pounder in all US restaurants by mid-2018. This year, menu introductions included a line of customizable Signature Crafted burgers and sandwiches like pico guacamole topping with artisan grilled chicken sandwich, which McDonald’s has credited with driving Q2 demand. In China, a new line of burgers are made with recipes from a Michelin Star chef, he said.
The company also has tuned in to customer demands in other ways. Despite knowing “all-day breakfast” topped its US customers’ wish list, McDonald’s didn’t do anything about it for a long time out of concern that it would be difficult operationally, CFO Kevin Ozan said at an RBC conference in June. McDonald’s finally introduced the All-Day Breakfast Menu in October 2015.
“Historically, at McDonald’s, it was we couldn’t do anything until everything was perfected,” Ozan said. “And so, it would take us a really long time to test it, retest it, go test in another country. By the time we’ve got through our testing, the world had moved on from where we were. So, we’ve gotten to be a little more nimble in moving quicker (and) taking some risks.”
Responding with what consumers want on the menus is just one part of the strategy. After realizing it was losing some customer visits to its fellow quick-service restaurant rivals that were winning value-conscious patrons with aggressive promotions like a 4 for $4 bundled menu deal, McDonald’s has also been more aggressive in rolling out its own offers, including $2 smoothies or blended coffee drinks this year.
“It’s a market share fight,” Easterbrook said.
by Andria Cheng
