McDonald's (MCD) has been a dominant player in the fast-food space, but part of the reason the chain has stayed on top is that it has never been complacent. That's partly because the company has a franchise-based model which means that major changes take time.
Something like the chain's efforts to revamp its stores by adding ordering kiosks and improved drive-throughs required franchisee buy-in because they have to pay for those changes. Those efforts, however, have paid off greatly as the covid pandemic accelerated delivery, drive-through, and takeout business.
Now, McDonald's has a new global growth plan it's calling "Accelerate the Arches." Much of what it's doing won't directly impact consumers (or investors) but the plan does show how the company intends to innovate on its menu going forward.
Image source: McDonald's
McDonald's Leans On Its Big Brands
While its rivals have been trying new things and companies like Yum Brands (YUM) Taco Bell seem to have a new limited-time offer each day, McDonald's has been a lot more reserved with its innovation. Its biggest menu changes last year were celebrity meals, which featured items already on the menu, and new takes on classics like the Chicken Mac.
That philosophy is going to be a major part of "Accelerate the Arches" as well which names "Driving new ways to bring our core menu to life," as one of five key pillars.
"Our customers crave simple and familiar favorites like Big Macs and world-famous fries. We continue to improve on our classics, stepping up our game on the menu items that built our heritage to deliver hotter, juicier, more delicious burgers to our customers across the globe. We will also build on the success of new global favorites like the McCrispy Chicken Sandwich while leaning into core icons like Chicken McNuggets," the company shared.
That's a model that has been a major part of Restaurant Brands International's (QSR) Burger King's playbook. That chain has leveraged its iconic Whopper to gain media attention and engage both new and lapsed customers.
McDonald's Wants to Focus On Execution
New menu items -- especially sort of familiar ones like new takes on old classics -- can drive sales and bring in new/lapsed customers. But, as McDonald's showed during the covid pandemic, and Domino's (DPZ) has demonstrated for a decade, efficiency and execution matter as much, if not more than food.
That's why another McDonald's "Accelerate the Arches" pillar is to unlock more growth potential from digital, delivery, and drive-through. The company currently gets one-third of its sales through digital, which it defines as orders placed through its app or in-restaurtant kiosks.
"We’re creating an even more personalized and convenient experience when our customers order digitally, enabling us to serve up relevant offers, make them feel more connected to McDonald’s, and increase visits and engagement," the company added. "That includes our loyalty program, which we’ve expanded to over 50 markets. In the U.S., for example, our digital business is powered by more than 25 million active customers, driven through MyMcDonald’s Rewards."
McDonald's also plans to increase its store count which adds to its delivery footprint and leads to faster service.
"We see an opportunity for further growth in many of our major markets. This may include testing concepts like the Order Ahead Lane at McDonald’s new restaurant in Fort Worth, Texas, to drive convenience for customers," according to the press release.
