McDonald’s Q1: ‘Meaningful Gains’

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McDonald’s Q1: ‘Meaningful Gains’

McDonald’s Corp. reported what CEO Steve Easterbrook said are “meaningful gains” in Q1 that show “the turnaround is taking hold.” That includes a 6.2% increase in same-store-sales globally and a 5.4% improvement in the U.S. (aided by 3% in pricing gain).

Easterbrook said the chain experienced positive growth in customer visits for the quarter and sales improvement across all dayparts. All Day Breakfast yielded incremental gains both in visits and average spend as customers added breakfast items to meals through the day. “We want to win the QSR segment and get back to a leadership position there,” he told analysts.

The chain is “looking at ways to extend [All Day Breakfast] in response to customer feedback,” Easterbrook said. Some markets already have gone to full-breakfast-menu availability all day.

McD_Bigger All Day Biscuit

Comparable sales for the International Lead Markets segment (Australia, Canada, France, Germany, and the United Kingdom) increased 5.2% for the quarter. In the High Growth segment (China, Italy, Poland, Russia, South Korea, Spain, Switzerland, and the Netherlands), comp sales increased 3.6%, led by a 7.2% increase in China. A sales rebound in Japan helped the Foundational Markets segment increase 11% in comp sales.

Easterbrook continues to say a national value platform will come later this year. Whether or not it will be a McPick platform remains to be seen, but he defended the McPick 2 for $2 promotion in January that some franchisees have criticized. It was timed to a post-holiday period when consumers would have less discretionary income, he said. The McPick 2 for $5 platform that followed was a “different construct,” intended to be the basis for meal building.

The question now, he said, is, “at what level do we want to deploy [a value platform] nationally and how much do we allow flexibility by region. That flexibility allows us to unleash the power of our regional muscle.” Variations, including different foods (even breakfast foods) for $2, $3.50, $4 or $5 are being run in markets.

The decision to refranchise operations in China, Hong Kong and Korea through possible sales to regional operators is part of the previously announced plan to get the McDonald’s system to 95% franchise-run. “This is about accelerating growth” in those areas, Easterbrook said. He said the plan is to add 1,500 units in those three markets over the next five years. The Nordic region (Norway, Sweden, Finland) also could see a sale in the next 12 to 18 months.

The recent test of smaller and larger Big Mac burgers apparently is part of what Easterbrook said is a commitment to enhancing core menu items. Interestingly he lauded the premium-price Signature burger line  (below), previously reported here, that he said has been “piloted” in the UK. That sounds like it has a bigger future, perhaps including the U.S. where it already is using “Signature Crafted.”


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