McDonald’s (MCD, Financial) reported its sales performance in the U.S., registering the worst decline of 4.6% in comparable store sales in a decade. The Big Mac maker has decided to pull up the socks by making necessary changes in order to revive customer foot fall and boost sales in its domestic market. Here’s a lowdown on the three steps McDonald’s taking to overcome the issues.
McDonald's headquarters in Oak Brook, Illinois, Picture from Wikimedia Commons
#1: An image makeover to attract millennials
One of the biggest challenge McDonald’s faces is consumer perception that it is a junk food outlet. The company desperately wants to change its image. The current year has been quite challenging for McDonald’s across different markets including the US, China, and Europe. The company’s had a poor run so far as the year 2014 is concerned.
McDonald’s has tried to come up with an effective plan. The Wall Street Journal reports that the company is working with ad agencies to generate an exciting idea to attract people in their 20s and 30s. These efforts are coming in at a time when fast casual restaurant chains such as Chipotle (CMG, Financial) are becoming the flavor of the season and young diners are increasingly preferring these spots over McDonald’s.
Besides, the company is also trimming its menu and testing the build-your-own-burger service to work out ways of pepping up its sales and recovering is lost position.
#2: Offering customizable burgers option
McDonald’s is looking to offer 100% customizable burgers. It is presently testing it in four restaurants. It means that the customers can have tailor-made burgers for themselves. It shows that McDonald’s is aware that if it has to improve its business, it has to provide what consumers want. And while the current trend is in favor of healthier food options, McDonald’s will have to ensure to provide items that are fresh, and high on quality. Many analysts strongly belief that customisation is something that would help McDonald’s attract millennials, effectively fight the likes of Chipotle, and thereby revive its declining sales.
#3: Introducing a leaner menu
Chipotle, which was once funded by McDonald’s for its expansion, is now its biggest competitor. McDonald’s had invested in Chipotle way back in 1998 with the aim of expanding its reach and attracting more customers. There was a time when McDonald’s had 90% stake in Chipotle, but in 2005 the former decided to sell its stake and concentrate on its core business. Probably this has been the biggest mistake that McDonald’s could have done. And now, Chipotle is enjoying huge popularity by providing organic food item.
Picture from Wikimedia Commons
McDonald’s is testing another way to replicate the success that Chipotle’s enjoying with its offerings. Declining sales of McDonald’s was due to low consumer spending in the U.S. and increased competition from fast casual chains like Chipotle that are slowly eating up McDonald’s market share and solidifying their footprint in the U.S. market.
The reason behind the success of Chipotle is that they stuck to the same menu ever since it was opened. Chipotle is very well aware of the fact that they do not need to constantly change the menu list or add tons of items to attract the customers. On the contrary, McDonald’s kept on changing the menu list thereby making it confusing for its customers. The oversized menu list is indeed the biggest challenge which McDonald’s has to fix. McDonald’s is trimming the menu list to make it smaller, more appealing and readable. Besides, the Oak Brook, Illinois based company is reviewing its cooking method to identify unwanted ingredients and cut down on some of them to make it more appealing to health conscious diners.
The company is trying several ways to evolve with the changing preferences of the customer. Removing unnecessary items from the menu and providing the options of eating customized food should help McDonald’s win customers and expand its customer base to return to its prime.
