Has McDonald’s finally hit its stride with its newly announced menu items? Analyst Andrew Strelzik of BMO Capital Markets thinks so. From a stock perspective, he believes that McDonald’s is on pace to reach its 2019 objectives, which includes a cash return to shareholders. Finally, some good projections for the Golden Arches.
When it comes down to it, a $22 to $24 billion cash return to shareholders comes down to brand initiatives. According to Strelznik, McDonald’s is poised to benefit from new menu items, a corresponding large-scale marketing project to promote the new items, and a stronger brand image to support demand. McDonald’s is set to take advantage of an improving restaurant environment that will emerge in the second half of the year.
Today’s modern food culture values real, made-to-order food, and McDonald’s seems to have gotten the message. By mid-2018, customers who order a Quarter Pounder can expect a fresh beef patty off the grill, not from out of the freezer. The move to go fresh comes after the chain tested the fresh beef burgers at more than 400 restaurants in Dallas and Tulsa, OK, for about a year.Competitors Wendy’s, In-N-Out Burger and Shake Shack all use fresh beef. Considering that McDonald’s revenue fell for the fourth year in a row last year, it might have been time for the company to return to its roots: the hamburger. That’s really what it comes down to, right? Quality food served in a quality environment by friendly staff. Everything else is a distraction (a point Carl’s Jr. and Hardee’s seem to have realized by dropping the sexy ads and introducing a Baby Back Rib Burger).
Combine that with the fact that McDonald’s has recently lowered prices across its drink menu, and launched a line of Minute Maid slushies in the Midwest and South. Indeed, it seems like Mickey D’s has a spring in its step as it aims to recapture lost customers.
Food Safety is a Top Concern Among Franchisees
As a brand initiative, McDonald’s fresh beef is exciting, but don’t forget that when it was first being tested in restaurants, franchisees were rightfully concerned about speed of execution and food safety. According to a Nomura survey, one franchisee wrote, “If we do not handle the meat perfectly, there is an opportunity for bacterial invasion of our product.” That is absolutely true, and brings to light storage, handling, and preparation concerns. Food safety is a wide-scale, concerted effort that requires attention to detail, documentation and adequate follow-up. It’s one thing to test a concept in 400 restaurants. It’s another ballgame to have more than 10,000 restaurants offering fresh beef. And in an organization as sprawling as McDonald’s, food safety is going to require the initiative of forward-thinking franchisees. Forward-thinking is about using technology to your advantage. It’s about realizing that there’s a better way to communicate through real-time, cloud-based technologies, and that there’s a better way to document kitchen conditions than paper and pen. Let’s face it: it’s safe to never change your menu and to never change. It’s also how brands lose—when they can’t adapt. As one McDonald’s franchisee stated, "Our line continues to slow down with added items and will continue to do so. However, we are a restaurant and we ought to always serve the best food so [the slow down of the line] may not outweigh the positive [of adding fresher ingredients]." A lot of critics have wondered if McDonald’s would ever be able to make a comeback. It seems like all the pieces are finally coming together. The question remains: are franchisees up for the challenge? Will they be able to navigate the “noise” of more foot traffic, avoiding distraction and prioritizing food safety? There are tools to help franchisees create a consistent customer experience. Check out Zenput’s mobile form for gaining store insights and contact us for a demo.Subscribe to our blog
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