Macca’s CEO pledges change amid gloomy outlook
Due to plunging global sales, the fast food chain avows "meaningful" changes to its stores.
In a conference call, transcibed by investment research firm Seeking Alpha and published on the NASDAQ website, Steve Easterbrook, Macca’s CEO, said, “Australia is in the early stages of turning around its business through a multifaceted approach to enhance brand appeal for consumers.
"This includes meaningful enhancements to our menu, including both core and new menu items across several categories, value platforms and better restaurant operations."
"Where we need to fix the fundamentals, we need to act now. And where we need to make an impact, I'm not looking for incremental steps. We intend to make meaningful impact with customers and how they perceive our brand and our food," he said.
This comes after the chain reported a global comparable sales decrease of 2.3%, and diluted earnings per share for the first quarter drop of 31% from a year earlier, to 84 US cents.
“We will try new things, move fast with what works, and even faster from what doesn't,” Easterbrook said.
"My overall vision is for McDonald's to be seen as a modern progressive burger company delivering a contemporary customer experience. Modern is about getting the brand to where we need to be today, and progressive is about doing what it takes to be the McDonald's our customers will expect tomorrow."
Click here for the full transcript of the conference call.
New strategy, new risks
Euromonitor International Senior Consumer Foodservice Analyst Elizabeth Friend said that these new changes for its turnaround strategy could break the fast food company out of the slump, but also pose entirely new risks.
“There has been speculation that the new plan could bank on delivery, greater participation in mobile ordering and payments, a broader roll-out of McDonalds’ new Create Your Taste platform, or more likely, some combination of the three,” she said.
“While a bold move like the latter does seem to be the kind of shift in strategy it may take to pull McDonald’s out of this slump, there are some very serious operational challenges that make it seem like it could result in trading one challenge for another.”
“The Create Your Taste platform may be more in line with what modern consumers are looking for, but it also undermines many of the key benefits that have always made up McDonald’s’ core identity and differentiated it from other options. Create Your Taste is not particularly fast, it’s not particularly cheap, and you can’t order it from a drive-through; with all of the other better burger options out there, what’s left to bring customers specifically to McDonald’s?”
“The outlet retrofit will also cost franchisees another considerable investment at a time when many are struggling to remain profitable and anxious for a quicker short-term solution,” she said.
