McDonald’s CEO sees toastier buns as way to kickstart slow turnaround
McDonald’s (MCD) is having a devil of time breaking a three-year funk, but the struggling restaurant chain thinks that tactics like toasting buns longer and changing how it sears its burgers could very well be the moves that put the iconic burger chain back on the path to growth.
The company reported on Thursday another dismal quarter of declining sales in the U.S., where comparable sales fell 2%, even worse than the 1.5% decline analysts polled by Consensus Metrix were expecting.
In May, CEO Steve Easterbrook, who took the reins in March with a clear mandate to stop years of sales bleeding at the world’s largest restaurant company, announced a series of steps to shake up the company. The plan included changes to McDonald’s new organizational structure, its intention to sell many more restaurants to franchisees than originally planned, and to cut costs to the tune of $300 million a year. But he gave precious few details of changes he was planning to the food it serves and the way McDonald’s restaurants operate, particularly in the U.S. Until now.
“Results here have been disappointing,” Easterbrook told Wall Street analysts, speaking of the U.S., which generates 40% of company sales. “We’re working to put more discipline back into the business and more quickly adapt to changing trends.”
Since the unveiling of McDonald’s turnaround, the company appears to be throwing a ton of ideas against the wall to see what sticks. Those have included testing kale (soon after McDonald’s mocked people who favor that trendy vegetable), trying out lobster rolls (a home run in the Boston area, according to Easterbrook), and, on the marketing front, bringing back the Hamburglar, albeit in a modern guise.
Easterbrook’s primary focus is improving food and service in the restaurants. That also includes emphasizing value, but also giving franchisees, many of whom reportedly have a strained relationship with McDonald’s at the moment, more marketing support to help them convey the message that diners will get their money’s worth.
As promised, McDonald’s has reduced the number of menu items, addressing a longstanding problem at the company that hurt service as workers had to prepare too many food items, creating logjams in the kitchen. It has also simplified the menu boards to speed up service at its drive-throughs and is giving employees at half of its stores training to improve order accuracy.
That’s on the service side. On the food side, McDonald’s is putting its focus on improving its core items, like hamburgers. (Earlier this year, it put the kibosh on items like wraps.)
“We’ve implemented new cooking methods in our restaurants: toasting our buns longer, changing how we sear, hotter beef, to deliver hotter, juicier sandwiches,” Easterbrook said. And all-day breakfast, something customers have been clamoring for for years, is apparently coming in October after very successful tests.
For all these efforts, the fact remains that McDonald’s had a lousy quarter, with the number of guests coming to eat in its restaurants down yet again, and new products and promotions flopping in part because of what the company calls “ongoing competitive activity.” That just adds to the pressure for these many tests and new approaches to work, something Easterbrook acknowledges.
“There is no silver bullet, no one move that will turn a business that’s been in decline for nearly three years,” he said. “While the recovery will be bumpy, I’m confident we’re moving in the right direction.”