McDonald’s points to ‘revitalisation’ of customer relationship as turnaround shows progress

McDonald’s says a renewed focus on being ‘customer led in our decisions and actions’ helped it to its first quarterly sales increase in its key US market for two years, while UK sales maintain momentum.

Sales at McDonald’s stores open for at least a year were up 0.9%, while global sales increased by 4%. The UK, which is one of McDonald’s lead markets, continues to see strong growth, which CEO Steve Easterbrook put down to a “robust planning process and taking actions to meet consumer needs”.

He cited recent marketing initiatives as key to the UK’s sustained growth, as well as understanding the products consumers want to buy. He also pointed to a new structure across its five lead markets that means they are overseen by just three “very senior” people which he believes makes decision faster and visibility clearer.

“Strong quality campaigns, core classics, successful promotions and new menu items have all driven growth in premium products,” he said, speaking on an earnings call today (22 October) following the results announcement.

“The speed of decision making, the visibility to see what is working and what is not and the ability to share that knowledge and getting to market quicker with things that work – we are seeing the benefits and we are incredibly encouraged. We have always had pockets of excellence, know what we want is broader excellence.”

The key US market

McDonald’s has unveiled an array of changes =to its menus, operating structure and marketing in the US in an attempt to turn around sales. These have included a streamlining of its menu, a greater emphasis on fresh and high-quality food and giving more autonomy to regional markets.

The introduction of an all-day breakfast menu has gone down particularly well, said Easterbrook, claiming it was another sign of McDonald’s making “life easier for its customers”.

On the marketing front Easterbrook spoke of a focus on becoming a “consistent leadership brand” in an attempt to improve consumer perceptions. He highlighted its participation in the White House climate pledge and the UN’s World Food programme as examples.

“Turning around our business requires a relentless focus on what consumers want. We want to give them a good feeling about visiting. We are pleased with our results as it proves we are revitalising our relationship with customers,” he explained.

However, he warned against analysts becoming overly optimistic, highlighting that this is just one quarter and that McDonald’s is looking for “sustained growth”.

“We have a commitment to run great restaurants to give customers even more reason to dine. We want fewer, bigger initiative to give a better experience – great tasting food, fast friendly service, a contemporary restaurant experience and all at the value of McDonald’s. We are making the right moves,” he concluded.

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