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McDonald's Franchisees Try Out In-Store Music, Video System

Over Burger and Fries, Customers Can Interact With Programming Via Cellphone or WiFi

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CHICAGO (AdAge.com) -- McDonald's franchisees John and Karen O'Keefe watched sales flatline for most of the year at their store in Chicago's suburban Woodfield Mall while other restaurants in the fast-food chain's system pulled in gains of 2% or better.
The m-Venue system lets customers use their mobile phones to search, select and activate music and video shorts. McDonald's is the first to activate the system.
The m-Venue system lets customers use their mobile phones to search, select and activate music and video shorts. McDonald's is the first to activate the system.

But after the couple installed a digital video-and-music system in their store, sales shot up 17%.

Using mobile phones
Customers at the O'Keefes store can use their mobile phones to search, select and activate music and video shorts, including music videos and movie previews, using text messages, mobile internet or WiFi sites. Video or tabletop information explain how to use the system, which is free to customers but text-message rates apply.

The store's m-Venue system, developed by Chicago-based Akoo International, also allows customers to download ringtones, wallpaper, trivia games, video games, sports videos and consumer polls. The content is licensed by companies including Sony BMG Music Entertainment and Universal Music Group.

McDonald's is the first customer to activate the m-Venue system, a company spokesman said. Music custom-selected for the store includes a "Top Pop" series sponsored by Coca-Cola Co. that features music categories such as modern rock, country rock and "flashbacks." Individual artists such as Justin Timberlake and Beyonce and movie previews for films such as "The Covenant" and "Gridiron Gang" are also featured.

Sharing cost of system
McDonald's did share some costs installing the system, said Mr. O'Keefe, who declined to specify how much. A handful of other stores in the Chicago area are launching the system by year-end.
The O'Keefe's took the system live Sept. 1 and since then have seen their 14-day same-store sales comparisons jump 17%.

"We haven't done anything else" different to boost sales, Mr. O'Keefe said. "There's really nothing else [happening promotionally] that would cloud the results."

After installing 10 flat-screen TVs and a sound system, the franchisees are now making cosmetic changes to the interior. They hope to separate the dining spaces into zones to appeal to different customer types, from early-morning mall walkers to shopping moms to mall employees holding meetings at the store.

Eventually the O'Keefes plan to use a loyalty system in which customers can accumulate and redeem free selections by purchasing combo meals or other offers. They also are exploring a rewards program for mall employees who now get a 15% discount on food and beverage purchases. The system allows the O'Keefes to control everything from the volume to blocking videos by daypart to ensure all content is appropriate for the time of day and the customers.

Shoppers notice the changes
On a recent sunny September Monday, traffic seemed expectedly light despite the noon hour. Customers seem to like the system, even though they didn't know much about it. Kevin Bush, a 20-year-old Sears employee, said he doesn't eat at McDonald's much but noticed the system when he came in. He said he liked it and would come back because of it. "They have music and TVs, not like they did before," he said.

"I like how you can text message to change videos," said Claudia Ponce, a 19-year-old shopper from Hoffman Estates, Ill. "It's a nice service for when we are here." However, her shopping buddy, Blanca Acevedo, 23, said it wouldn't make enough of a difference for her to eat there more. "The prices are too high," she said.
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