Speaking on a call following its Q4 results today (25 January), McDonald’s CEO Steve Easterbrook said that so far a quarter of McDonald’s 1,200 restaurants in the UK have been converted to offer customers self-order kiosks, digital merchandising and customised order points.
That number will be closer to a third by the end of the year. McDonald’s will also introduce table service, which is on currently on trial in 14 locations, to “nearly all” converted restaurants in 2016.
The changes are part of Easterbrook’s plans to turn McDonald’s into a “modern and progressive” burger company as competition in the market increases. That involves a move to premiumise its offering and improve service, while at the same time not losing focus on the value aspect that has made McDonald’s so successful in markets such as the US.
Digital has also become more of a focus, with McDonald’s launching its first app in the US at the end of the third quarter. Currently the app offers “basic functionality” such as restaurant locations, nutrition information and redeemable offers.
Easterbrook said the aim is to get people to register so it can start to personalise those offers and boost sales. Nevertheless he believes digital will be a “growth engine” for McDonald’s, with downloads already reaching 7 million.
“This is the first time at McDonald’s that we have built in an incremental sales increase based on digital. We believe [the app] is driving behaviour and as we build capability it will become increasingly compelling and be a growth engine,” he said.
“This is a loyalty play. We will offer more initiatives to scale the number of customers and usage and enhance the experience to encourage them to return to the app and McDonald’s more often.”
“Turnaround gathering momentum”
Easterbrook said the strategy is “gathering momentum” with Q4 marking the second straight quarter of growth. Results show global comparable sales were up 5% in the quarter, while sales in its ‘lead’ international markets, which include the UK, increased by 4.2% with the UK performance described as “strong”.
However, Easterbrook warned it would require a full year of sales growth before he could say the strategy is working long term.
“We have seen two quarters of growth in our turnaround. I would want another quarter or two before we move from a turnaround plan into a longer term growth plan.”
Steve Easterbrook, CEO, McDonald’s
Nevertheless McDonald’s has a “small and senior team” working “discretely” on what that might look like, including the brand positioning and vision.
“Around the middle year we would be confident it is the right time to transition from turnaround to growth,” he explained.