By Jason Simpkins
McDonald’s Corp. (MCD) is the quintessential American fast-food chain. For decades, its golden arches have dotted the U.S. landscape, its advertisements have dominated the airwaves, and its catchy slogans and jingles have been drilled into our brains.
But McDonald’s ability to adapt to shifting consumer demand and build a strong global brand, as well as its customary role as a fast and reliable vendor of cheap meals, has made it a market leader.
in the month of November, as cost-conscious consumers opted for more affordable meals.
“,” David Morris, senior analyst at consumer research firm Mintel, told The Associated Press.
In addition to increased traffic from cash-strapped consumers looking for affordable meals, McDonald’s has also bolstered its foreign sales.
Global same-store sales surged 7.7% – down only from October’s 8.2% increase. Sales climbed 7.8% in Europe and 13.2% in the company’s Asia/Pacific, Middle East and Africa division.
The company has been so successful at bringing in revenue that it upped, a move that means even more to investors at a time many dividend-paying companies are lopping off their investor payouts.
McDonald’s New Menu
McDonald’s menu selection is one reason for the growth. Burgers are the cornerstone of McDonald’s business, but strong sales of breakfast foods and chicken sandwiches have been the company’s main growth engine. For instance, a breakfast menu that was once limited to the Egg McMuffin now includes McGriddles, the sausage biscuit sandwich, and hot cakes.
After concocting a spicy chicken sandwich to compete Wendy’s – one half of the Wendy’s Arby’s Group Inc. (WEN) – the company earlier this year took on Chick-fil-A Inc. with the introduction of a Southern Style Chicken Biscuit. McDonald’s also went “south of the border” with the introduction of the McSkillet Burrito and Chipotle BBQ Snack Wrap.
All of these new items were designed not just with the objective of sneaking market share way from competitors but catering to regional tastes.
"They started looking at Chick-fil-A and they have this chicken product and said we have to do something comparable to them," Vivian de Jesus, franchisee of four Atlanta region McDonald's restaurants, told the St. Louis Business Journal. "The South is a chicken market and we needed something that would compete on the same level."
McDonald’s is no doubt hoping its new, spicier products will catch on in the American Southwest.
McDonald’s has also beefed up its global menu, tailoring its international offerings to the palates of its foreign consumers. The restaurant first started serving beer in Germany in the 1980s and then in Canada. Customers can order pasta freshly cooked to order in Rome, porridge in the United Kingdom, and a deep-fried patty of beef ragout in the Netherlands.
Did Somebody Say Makeover?
In addition to making over its menu McDonald’s has embarked on an ambitions “reimaging” campaign that originated in Europe, but has since morphed into a global effort.
A few years ago, after European customers snubbed their noses at McDonald’s trademark red and yellow motif and rush-in, rush-out service, the company tapped Denis Hennequin, president of McDonald’s European operations, to lead a massive image overhaul.
McDonald’s spent more than $800 million remodeling 1,280 restaurants across Europe. The company’s signature red and yellow signs and plastic and vinyl interiors were replaced with more art deco scaffolding, leather couches, wood tables, and wall paintings. It also began offering Internet access and rental iPods to many of its contemporary European customers.
"The brand position is different in different parts of the world," Hennequin told BusinessWeek. "In Europe it’s more about the experience.”
However, the McMakeover got such a positive response that McDonald’s has decided to apply some of the lessons learned overseas to its home market. The company has applied the principles of feng shui – the strategic representations of earth, water, fire, metal and wood – to many of its new U.S. locations.
Earth tones, bamboo plants and water trickling down glass panels are now common features at many McDonald’s restaurants. Plush chairs and flat-panel televisions are also cropping up.
Finally, the makeover also includes new packaging for McDonald’s food. The company hired the U.K.-based Boxer to help rebrand and repackage its product.
Paul Castledine, Boxer's chairman and chief creative officer, told BuisnessWeek that designers spent hundreds of hours in focus groups before settling on the concept of provocative headlines bolstered by vivid photography as the new look for McDonald’s packaging.
"There is only one," McDonald’s new Big Mac container, proudly exclaims. Meanwhile, the other side of the box depicts the vegetables, cheese, and cooking utensils used in the burger's making.
Mary Dillon, McDonald's global chief marketing officer, told BusinessWeek that the company wanted to "create unique personalities for our menu items by telling a story about each one."
Like its menu offerings, McDonald’s new packaging is unique to both the product and region. Packaging in Australia highlights beef sourced in nearby New Zealand. In Argentina, some sandwiches feature images of marinated seasoned onions, and in Europe, Le Hamburger's ciabatta roll is the main point of emphasis.
“This demonstrates the authenticity of the locally grown ingredients we use,” Dillon said.
The new packaging made its debut in at 13,900 U.S. locations in early November. And while Dillon didn’t say how much the company spent on the redesign, estimates range from $50 million to $80 million.
That’s quite a bit of money, considering most McDonald’s customers will likely discard the new packaging without so much as a second look. But the company believes strongly that this is a vital next step in developing a more consumer-friendly product.
"People want to know more and more about the food they're eating," Castledine said. "And, well, the box is the most intimate touch point with any brand."
Also, 82% of McDonald’s new consumer packaging is made from renewable paper or wood materials.
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