Wednesday, May 13, 2015

McDonald’s Wants to Speed Up With Smaller Drive-Through Menu

McDonald’s Wants to Speed Up With Smaller Drive-Through Menu

The burger chain also will bolster its midprice menu with items that cost between $1.50 and $3

By Julie Jargon in the Wall Street Journal

McDonald’s Corp. unveiled plans to simplify its drive-through menu and revamp its midprice offerings as it seeks to turn around its struggling U.S. operations.
McDonald’s executives, in a webcast meeting with franchisees Monday, said the company intends to display only the top-selling drive-through items on outside menu boards in an effort to speed up orders and improve service, according to people familiar with the matter.
The burger chain also will bolster its midprice menu with items that cost between $1.50 and $3, more than those on its Dollar Menu but less than its more premium-priced products. The revamp marks an effort to appeal to a wider range of customers, executives said on the webcast, the people familiar with the matter said. McDonald’s franchisees have long complained that customers buy from either the high or low end of the menu but don’t have enough so-called midtier items from which to choose.
The plans are the latest in a string of moves by new Chief Executive Steve Easterbrook to try to fix McDonald’s problems, including a bloated U.S. menu that has added complexity to kitchen operations and created long drive-through lines. McDonald’s franchisees have been frustrated by declining U.S. sales, and some have expressed disappointment with some of Mr. Easterbrook’s initial moves, including plans to raise wages at company-owned outlets.
Mr. Easterbrook, who took the helm in March, said last week at an investor presentation that the company would sell more restaurants to franchisees and restructure international operations under four segments to pare $300 million in annual costs and create a more nimble business. He earlier announced several big changes in its core U.S. business, including plans to curb the use of antibiotics in its chicken supply and to sell premium burgers and other sandwiches.
McDonald’s also in recent months has cut some items, including versions of snack wraps and chicken sandwiches to streamline the menu.
Monday’s internal meeting with franchisees provided more menu details about the company’s plans than last week’s investor presentation, which had been much anticipated. The presentation had left many analysts and investors wanting to know more about how McDonald’s would improve its food and service at a time when shifting consumer tastes and fierce competition are pressuring sales.
On the webcast, McDonald’s executives said the company plans to add a McChicken sandwich with leaf lettuce and tomato, as well as a double burger with leaf lettuce and tomato for around $1.50, up from the current range of $1.19 to $1.39 for similar sandwiches. The upgraded sandwiches will be sold in addition to the lower-price versions now available, according to one of the people familiar with the webcast.
Executives also said they would roll out frozen and fresh lemonade drinks this summer as well as expand a test of all-day breakfast, which is currently available in San Diego and will roll out to Nashville, the people said.
One of the initiatives that predated Mr. Easterbrook and was intended to lure more customers has evolved. The company has been experimenting with a Create Your Own Taste concept, offered only inside restaurants, in which people could customize their own burgers. But with more than 60% of sales coming through the McDonald’s drive-throughs, many franchisees pushed back, and the concept has since largely morphed into what the company is calling “tastecrafted,” in which drive-through customers can choose from among a set number of different burger toppings and buns. Executives on Monday said McDonald’s will expand the more drive-through friendly version of burger customization.
A spokeswoman for the Oak Brook, Ill., company declined to comment on the webcast. “We’re always innovating around McDonald’s food, drinks and restaurant experience, and we’ll share news on these initiatives when the time is right,” she said.

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