By Julie Jargon
McDonald's Corp. outlined plans for major changes to its food
offerings--from the items it sells to how they are made--in the
fast-food giant's most far-reaching steps yet to try to rejuvenate
its flagging U.S. business.
The measures, discussed on Wednesday in an investor briefing on
turnaround efforts, range from culling items from a menu that has
become bloated to giving more customers the option of more
customized ordering. Executives also said the chain plans to study
every ingredient in its products and review different cooking and
holding techniques to improve the quality of its food.
"We must and will win with our food," new McDonald's U.S.
President Mike Andres said during his first public address to
investors.
The briefing came two days after the company reported the
steepest monthly same-store sales decline in the U.S. in more than
14 years. The November drop extended a sales slump in McDonald's
core market that began in 2012 and has persisted despite an
improving U.S. economy and, more recently, falling gasoline prices.
The company has suffered from a range of problems, including a
complicated menu that has slowed service and the loss of customers
to fast-casual restaurants offering products that are viewed as
fresher and more healthful.
"In the future we want to be much more culinary-inspired," Mr.
Andres said. "We need to think about our ingredient labels being
much smaller," with recipes consisting of ingredients people would
find in their pantries.
"Why do we need to have preservatives in our food?" Mr. Andres
said, noting that McDonald's goes through ingredients very quickly.
"We probably don't."
Executives said the fast-food giant will remove eight items from
its menu next month--though they didn't specify which ones--and
reduce the number of extra value meals to 11 from 16 in an effort
to simplify the menu. In markets where the reductions have been
tested, the company said it has seen a decrease in drive-through
wait times.
At the same time, the company is adding the ability to customize
orders in some markets, an effort dubbed "create your taste" that
lets customers use tablet computers to choose toppings. The
customized option will be available next year in about 2,000 of its
more than 14,000 U.S. restaurants. "Customers have told us, 'Make
the best burger you can,'" Chief Executive Don Thompson said.
Mr. Thompson said McDonald's wants to be viewed as a chain of
"modern progressive burger and breakfast restaurants."
Breakfast has been one of McDonald's bright spots in the U.S.,
and the company soon plans to start advertising the freshness of
its offerings, including the fact that the restaurants crack eggs
for use in breakfast sandwiches, whereas some rivals reheat
breakfast items.
John Gordon, founder of restaurant consulting firm Pacific
Management Consulting Group, said the changes McDonald's is making
to its food and the way it communicates the quality of its food are
critical. But he was disappointed that the customized burger
program will reach so few restaurants next year and says he would
have liked to hear more about breakfast.
"They should offer breakfast later in the day. Younger people
tend to consume breakfast at later hours and that's one of the
groups they're weak with," he said. "But for a slow-moving,
risk-averse behemoth, they said the right things."
The plans announced on Wednesday didn't buoy McDonald's shares,
which closed at $90, down 1.5%, in line with the broader market.
McDonald's shares have fallen 7.2% for the year.
McDonald's also plans to change its pricing structure to reduce
the gap between its dollar, core and premium products. Core menu
items, Mr. Andres explained, have absorbed a disproportionate
amount of inflationary cost pressure, causing customers to trade
down to the lowest-price menu items, hurting profitability.
The company is putting more control in the hands of local
markets in a new U.S. corporate structure announced in October.
McDonald's says menu items that sell well in one part of the
country don't necessarily appeal to consumers in another, so local
managers are being given more authority to roll out locally
relevant products--an initiative intended to also increase the
speed of menu innovation.
Mr. Andres said the shift to local control is part of McDonald's
effort to change its corporate culture to be more nimble. "We tend
to be very risk-averse and make sure we test and test and test. We
have the ability to greatly increase the speed to market," he
said.
Local managers are also being given more autonomy to run
traffic-boosting promotions. One market, for example, is offering a
60-second service guarantee.
Mr. Andres also said the company has to become more involved in
local communities by sponsoring local sporting events and holding
events to entice families to dine at McDonald's. "People want to
feel good about brands they do business with," he said.
Write to Julie Jargon at julie.jargon@wsj.com
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