McDonald's CEO: '2015 Will Be A Year Of Gaining Momentum'

Chain Doubles Down On Localization, Trims Menu, Adds Customization

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Don Thompson
Don Thompson
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McDonald's has begun to outline its strategy to turn around the company's U.S. business, and much of it revolves around choice, for both customers and franchisees.

Consumers will get more menu choice with the chain's Create Your Taste platform and local McDonald's will be given a greater choice regarding promotions and products so that franchisees can offer items they feel for the market.

McDonald's CEO Don Thompson said 2015 will be a year of "gaining momentum. We're making progress as we move closer to our customers and as we change to be more relevant and progressive. Modern service, genuine hospitality, personal engagement... customized menus and a brand that people can truly trust. This is the McDonald's experience of the future. It is the path that we're forging."

McDonald's needs to act fast. For 2014, global same-store sales decreased 1.0% and in the fourth quarter, U.S. same-store sales fell 1.7%. McDonald's hasn't had a positive sales quarter in the U.S. since third quarter 2013, when it posted a 0.7% bump.

And although the chain's same-store sales were up slightly in December 2014, McDonald's warned that it expects January worldwide same-store sales to be negative. "Results are expected to remain pressured, particularly in the first half of the year," according to its earnings release issued today.

For its recovery plan, Mr. Thompson said McDonald's is focusing on various customer-services models like multiple like self-order kiosks, table service or mobile ordering. He emphasized a focus on re-evaluating the value proposition across its three tiers of entry-level items, core items and premium items. At the same time, he said, "we're thinking differently about how to encourage customers to bundle products and use add-on purchases to create a satisfying, affordable meal."

The Create Your Taste platform is meant to appeal to easily customize their burgers or chicken sandwiches. It will also be rolled out in Australia.

The menu, however, will be slimmer, part of the chain's effort to reduce complexity and speed up service. McDonald's said in December that it would trim eight items from the menu starting in January as part of an effort to simplify operations.The chain also said it will reduce its extra-value meal combos from 16 to 11. McDonald's said Friday that this week it began implementing those changes and have so far seen positive results, but declined to divulge specifics.

Mr. Thompson also made it clear that McDonald's marketing will not necessarily be standardized. "We're changing. And we're doing it aggressively. We know that some tactics will be different from market to market and region to region around the world and that's why our plans are supported by comprehensive and localized execution approaches that rely on our franchisees, our company employees and suppliers to satisfy customer expectations and drive stronger business results."

The chain is in the midst of rolling out various steps in its brand refresh, created by Publicis Groupe's Leo Burnett. The first ads debuted on Jan. 3, focusing on "lovin'." It followed soon after with another 60-second spot highlighting the chain's signs to illustrate that its franchisees have a close connection with their communities.

Mr. Thompson said that the recent advertising is "rekindling" the chain's relationship with its customers. We know that when our customers feel good about us and about eating at McDonald's they visit us more often," he said.

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