$9.7B P&G ad spending
For nearly a decade, McDonald's same-store sales were climbing upward, but in 2012 a deceleration hit the Golden Arches. It's only within recent months that its top executives finally copped to having some hurdles to overcome, namely operational woes and a decline in consumer relevance.
"The U.S. is our largest market and has the most significant need for improvement in the near term," said McDonald's Chief Financial Officer Peter Bensen, speaking at RBC Capital Markets' Consumer and Retail Conference Wednesday, who called the first half of 2014 a "a service reset" for the business. At the conference this week, the chain offered a look at how it plans to tackle those problems, and it boils down to three tactics: improving marketing; focusing on core products and stepping up digital, including e-commerce.
The company's new U.S. chief marketing officer, Deborah Wahl, started at the beginning of the month, and as of now it's unclear what agency changes she might make, if any. But the company has also rejiggered its marketing department. Marketing at the Golden Arches used to be organized by product -- there would be a marketing lead for beef or chicken, said Mr. Bensen -- but it is now organized by consumer group such as millennials, families and adults.
Only a few months after McDonald's hired it first chief digital officer, Atif Rafiq, late last year, Mr. Bensen is fast-tracking testing of mobile payments and ordering. "By later this year…[there will be] multiple tests around the digital payment and digital ordering in various markets around the world, and a lot of work on how do we come up with a loyalty program or this customer relationship aspect that can be uniquely McDonald's," said Mr. Bensen. He added that in a move that will be "a bit unnatural for McDonald's," the chain will likely have to put digital initiatives out into the market "that we know are not 100% perfect, but if you wait in this space until everything is 100% figured out, then you're going to miss the whole opportunity."
The company erred last year by rolling out four new products in the U.S. -- McWraps, blueberry-pomegranate smoothies, Egg White Delight McMuffins and its new line of Quarter Pounders -- in too quick a succession, a move the chain said ultimately slowed down operations. Mr. Bensen said this year the company will focus more on core products like burgers. Just this week, the chain rolled out its Bacon Clubhouse burger, an item it now considers a core-menu product.
Another emphasis will be on McDonald's breakfast -- one of its strongest pieces of business and one that will likely see increased competition when Taco Bell rolls out its breakfast at the end of the month.