The McExtra card began distribution in November in McDonald's 71 outlets in Hawaii. Cards are distributed exclusively through McDonald's outlets to customers who fill out applications -- building a powerful database for the fast-food giant.
The card program is linked to in-store promotions and involves local tie-in partners, ranging from tourist attractions to supermarkets and gas stations. The program is backed by media advertising.
Customers who swipe cards through electronic readers at cash registers get instant awards -- from free food to trips -- and accumulate points based on purchases.
Jack Greenberg, chairman-CEO, McDonald's USA, told Advertising Age last week he's closely watching results of the program to determine the feasibility of a national rollout.
It currently costs each restaurant around $5,000 to install the technology needed for the loyalty program, a relatively sizable sum at a time when the chain is trying to cut costs.
"As technology improves and costs come down, you've got to keep looking at these things. Whether [the loyalty program] would in the long run be a national thing, I don't know," said Mr. Greenberg.
"Our average check is relatively low," he continued. "Speed of service is so important that anything like this has to be examined in that context. It could cost us a lot in terms of customer satisfaction and sales. In an airline context, you're not worried about speed of service and the transaction cost is a relatively small portion of the total sale."
Victor Lim, a six-unit franchisee based in Honolulu, said customer recognition of the program "has just been outstanding," with 80% of consumers familiar with it.
`SAME OLD DOESN'T WORK'
"The best of ideas always come from the field," Mr. Lim said. "The economy in Hawaii is struggling in relation to the rest of the country, and we wanted to do something different. As things move along in advertising, the same old doesn't work."
As it seeks to emphasize local store marketing, McDonald's is also launching a bolder format for point-of-purchase displays and paying close attention to a limited test of video menu boards.
For point-of-purchase materials such as banners, window signs and menu board inserts, the fast-food chain is launching a new format with bolder graphics, sharper food photography and less copy.
A MORE UNIFIED LOOK
The program is aimed at providing a more unified brand look to various in-store materials used to tout national and local promotions, according to an internal marketing memo obtained by Advertising Age.
"Making a brand promise is what electronic media advertising does best," said the memo. "But keeping that promise is clearly within the store's domain."
The computer-programmed video menu boards, operating in three stores in Orlando and a handful of units elsewhere, are generating favorable reviews.
While high-priced -- one franchisee estimates the boards cost $10,000 to install -- they potentially are cheaper than shipping out new promotional and menu materials to the chain's estimated 12,400 U.S. restaurants.
FOOD PHOTOS ALTERNATE
The boards were created by Siren Technologies, a division of Frankel & Co, Chicago. Visuals include a changing series of bright, high-quality food photos.
"Customers love it," said Louie Mele, a regional VP for McDonald's Tampa, Fla., region. "It's clean. It's easy to read." When the video boards were used to promote pizza -- sold in a few U.S. McDonald's outlets -- sales of the product rose 25%, he said.
Mr. Greenberg would like to see a major market test of the video boards, which he said are "so powerful compared to what we've got."