100 innovations: McD's tests Wi-Fi, self-service and 'china'

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In several New York locations, McDonald's customers can access the Internet free with the purchase of a Value Meal. In Raleigh, N.C., they can order that Value Meal at a kiosk and have it delivered to their table. And in Rockford, Ill., McDonald's customers, after being seated by a host, can eat their Value Meal with clear flatware off black plastic "china."

These are just a few examples of how McDonald's, which shifted its strategy from adding stores to adding customers, is focusing on innovation to drive sales. "The only way to do that is to bring new benefits to consumers around the world," said Mats Lederhausen, president-McDonald's business development. "Obviously, one doesn't achieve that in a quarter, so there are a lot of activities around the world."


Part of the plan is menu, with a new product pipeline centered on premium, wholesome and snack foods to appeal to the on-the-go lifestyles. Already, McDonald's USA, its largest market, has had back-to-back successes with its premium salads and McGriddles breakfast sandwiches. Both products have sold briskly, driving a second-quarter same store sales gain of 4.9%, in the U.S. Last week, McDonald's announced Exec VP-Chief Concept Officer Thomas C. Ryan, who was responsible for many of McDonald's new menu items, is leaving.

Elsewhere around the world, the chain is launching new products for local tastes: Feta Cheese Salad and organic milk in the U.K., Deluxe meals in Germany, and Croque McDo sandwich line extensions and Fruit a Croquer (or "crunchy fruits") in France.

Dozens of store-design changes are also in the works, including a prototype unit with more comfortable seating and ambient lighting expected to be unveiled later this year.

Last month, McDonald's expanded its wireless fidelity, or Wi-Fi, access in 75 San Francisco units, in addition to the 10 already in New York since March. To promote the effort in New York, McDonald's is giving customers an hour of access worth $3 for free with the purchase of a Value Meal. Aimed at on-the-go road warriors, the program will expand to Chicago in the U.S., and international markets said to include Australia, Japan, Sweden and Taiwan. In May, McDonald's Brazil extended its Internet test with AOL Latin America to provide access, content and browsers in most of McDonald's 584 Brazilian restaurants.

no language barrier

In Colorado Springs, Colo., and Raleigh, N.C., the company is testing self-service kiosks called "My McD" where customers can order their food and have it brought to their table. McDonald's CEO Jim Cantalupo told analysts in an April call that the kiosks bypass language barriers, speed up service and reduce ordering mistakes-when used properly.

McDonald's also is testing Redbox, a 9-foot tall vending machine in Washington, D.C. Most of the so-called "automated convenience stores" dispense DVDs, but some stock up to 140 products ranging from toilet paper and Q-tips to soup and sandwiches for $1.50 to $5.

In the U.K., McDonald's is trying to speed drive-through customers by placing a person right in the lane to take orders. The company also is trying "chip and pin" technology in Northampton and Scotland to allow for debit card payment.

In November the chain launched a "restaurant optimization" program in Illinois and Ohio stores. The service is streamlined with automatic beverage dispensers and food boxes that are faster to handle and less damaging to the food. There are fewer menu items, larger pictures on the menu boards and pricing that ends in easy-change zeros and fives. A host is also in the restaurant lobby to help customers.

Among the upscale visual cues of this particular test: Crew uniforms sporting white shirts and colorful ties, clear flatware and black plastic plates. Jeff Newman, director-operations in charge of the project said in some instances, service times have been trimmed 20 seconds or better.

On the customer service end, employees at 180 restaurants in Tampa, Fla., are being trained to handle grumpy customers with a computer-based e-learning program. That effort is expected to trim training costs by 15% and be expanded nationwide.

But the question is whether all the innovations will add up to a better customer experience. "I don't think that it will make much impact on the business," said Andy Barish, restaurant analyst with Banc of America Securities. "Better food and advertising will have a better impact."

contributing: normandy madden, dagmar mussey, emma hall and mark tungate

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