How McDonald’s Is Effectively Executing Its Turnaround Strategy?
After tasting the initial success of its turnaround strategy, McDonald’s (NYSE:MCD) is now working on several initiatives aimed at enhancing customer experience to drive revenue growth in the future. The company reported a 6.2% increase in comparable sales in Q1 2016, primarily on back of the success of its ‘All Day Breakfast’ initiative. Also contributing were tailwinds such as leap day, a milder winter and a strong focus on executing the turnaround plan. The company is now pursuing additional opportunities to keep this growth momentum going. These include innovation in food items, as well as quality and improvements in the overall restaurant experience. McDonald’s witnessed a 6% improvement in the overall customer satisfaction score in the U.S. in Q12016 compared to the first quarter of last year. In sum, we believe that, as the company continues to focus on its turnaround strategy, it should see continued growth in comparable sales in the coming quarters.
See Our Complete Analysis For McDonald’s Corporation
Creating A Brand Appeal For Value Conscious Customers
- What To Expect From McDonald’s Q4 After Stock Up 13% Since 2023?
- After A 14% Top-Line Growth In Q2 Will McDonald’s Stock Deliver Another Strong Quarter?
- What To Expect From McDonald’s Stock Post Q2 Results?
- McDonald’s Stock Likely To Trade Lower Post Q1 Results
- McDonald’s Stock Up 16% Over Last Year, Can It Grow More?
- What To Expect From McDonald’s Stock Post Q4?
The success of McDonald’s ‘All Day Breakfast’ initiative can be partially attributed to the availability of low priced menu items throughout the day. The company is now looking to build on this success and through its McPick2 platform it is providing its U.S. customers more choices at compelling price points. It tested two versions of this platform in Q1 2016 and both resonated well with customers. In France the company relaunched its McFirst platform with additional value options including new proteins and product lines to strengthen its value proposition. Expanding value options internationally, the company recently launched its ‘All Day Breakfast’ initiative in Australia. McDonald’s is also looking to focus on widening its geographical reach and the company recently opened its first restaurant in Kazakhstan in Q1 2016, which became the company’s 120th market.
Focus On Menu Innovations
McDonald’s is testing several new and innovative menu items in all price ranges to attract consumers. The company piloted its new “Signature Collection” in the UK in Q1 2016, which contains premium menu items. Recently it started testing a new version of McNuggets that does not have any artificial preservatives. The company is phasing out the McWrap and testing a different size of the Big Mac along with testing ‘all you can eat French Fries’ in one of its restaurants in Missouri. The company also launched McDonald’s Next in Hong Kong earlier this year, which offers healthier menu options such as a salad bar and quinoa. We believe adapting menu items to changing customer preferences with a focus on the quality of ingredients is a very important sales driver for the company. McDonald’s is ensuring that its menu items keep pace with the latest customer trends.
Employee Initiatives Leading To Higher Customer Satisfaction
McDonald’s is focusing on several employee related benefits which have led to both a reduction in its staff turnover and to a consequent improvement in customer satisfaction in the U.S. The company expanded its Archway to Opportunity program, which now provides tuition assistance to more than 5,000 eligible employees in both company-operated and franchise restaurants. McDonald’s has also made improvements to its compensation and benefits package for its U.S. employees as part of its retention efforts. The company has also launched a training module which helps shift managers to learn how to coach and motivate crew to deliver a better customer experience. We believe a trained and experienced staff can go a long way for the restaurant to improve its customer satisfaction. As the company aims at more efficient service to a large customer base, high employee morale will be key to fulfilling this goal. McDonald’s service innovations — such as mobile ordering, kiosks and table service, and better trained employees — are all working well to deliver an enhanced customer experience.
As McDonald’s continues to make progress in executing its turnaround plan, we believe these initiatives will attract consumers, leading to higher comparable sales and revenue growth in future.
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap