3 restaurant LTOs that went bad

Wendy's, McDonald's, and Red Robin re-examine marketing schemes

More Articles by NRN.com

May 29, 2012 @ 4:09 PM

Continued from page 3
McDonald’s: Loose Change menu erodes average check in Australia
Securities analysts recently visited the McDonald’s Corp. Innovation Center, where the company shares best practices from around the world. There, McDonald's executives told a cautionary tale about value menus from its Australian market, a major profit contributor to the company’s Asia-Pacific, Middle East and Africa, or APMEA, division.
According to research notes from Jeffrey Bernstein of Barclays Capital and David Tarantino of R.W. Baird, Australia’s “Loose Change” value menu drove large gains in guest counts but caused more erosion to the average check than anticipated.
McDonald’s officials told analysts that while the result is a short-term trade of average check for traffic gains, the improvements in guest counts would positively benefit the Australian market over the long term.
“This phenomenon could continue, but the traffic gains are seen as positive for longer-term business trends,” commented Tarantino after meeting with McDonald’s executives, including chief financial officer Pete Bensen, at the Innovation Center.
McDonald’s same-store sales in APMEA grew 1.1 percent in April, which the company attributed mainly to results in Japan offsetting strong performance in other countries.
Same-store sales in the United States grew 3.3 percent for the month, which McDonald’s said resulted not only from seasonal beverages but value pricing. The company’s major value move came toward the end of March when it introduced the Extra Value Menu, a collection of the existing menu items with prices falling between the Dollar Menu and Extra Value Meals.
McDonald’s promoted the 20-piece Chicken McNuggets heavily on television, as well as spring and summer beverages like Frozen Strawberry Lemonade and the Cherry Berry Chiller.
Watch a commercial for the Cherry Berry Chiller; story continues below