McDonald’s says turnaround plan is working despite sales fall

McDonald’s claims it is ‘already realising some of the benefits’ of the turnaround plan it launched in May despite posting ‘disappointing’ sales results in the second quarter of its financial year.

After it laid out plans in May to “reset and turn around the business” following poor global sales in recent years, the fast food giant said it has made “significant progress in a short amount of time”, implementing its “biggest organisational change in history in just two months”.

Global sales decreased by 0.7% in the company’s second quarter while revenue rose by 1% if currency fluctuations are excluded.

However, sales in Europe sales rose by 1.2% driven by a “solid performance in the UK and Germany”.

The UK saw its 37th consecutive quarter of growth, which the company credited to the launch of premium products, marketing efforts such as its Monopoly campaign and its first ever promotional breakfast item – sausage and bacon sandwich.

Speaking on a conference call today (23 July), CEO Steve Easterbrook said: “While our second quarter results were disappointing, we are seeing early signs of momentum. We’re confident the changes we’re making are the right ones.”

He added that the transformation is “necessary” for the company to become a “modern, progressive burger company delivering a contemporary restaurant experience”.

“It’s not enough to say we want to be a modern progressive burger company, consumers need to see us that way,” he added.

With that in mind, McDonald’s has also launched a new ad as part of its “Good Times” campaign. Created by Leo Burnett, it tells the story of a boy whose attempts to have fun are constantly thwarted until, that is, he goes to McDonald’s.

‘Returning excitement to the brand’

The turnaround plan introduced in May highlighted the importance of “returning excitement to its proposition and brand”.

In June the company appointed Bacardi’s Silvia Lagnado as its first global CMO since 2010, highlighting the crucial role marketing and customer experience must play in the company’s turnaround strategy.

In November it announced plans to launch a global mobile app, which will offer promotions and payments. It initially announced its plans to introduce mobile and web ordering last year as part of an effort to offer customers more ordering options as part of a wider personalisation strategy.

Further, following the launch of McDonald’s “Create Your Taste” platform in Australia, which allows customers to order via a digital kiosk and choose their bun, size of burger and ingredients, the company announced plans to push the marketing platform as a global initiative to drive customer engagement not only through digital kiosks but also through table service and mobile ordering.

The initiative, called “Experience of the Future”, has rolled out across 150 restaurants in the UK so far, a number the company plans to double by the end of 2015.

Easterbrook said all markets have plans to build out the initiative in order to promote personalisation.

“McDonald’s is at its best when we have test sells pushing the boundaries, then we can push it market to market,” he said.

He added that the US trial of all day breakfast has “gone well” and the company will expand the launch to “better gauge customer response”.

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