McDonald’s ups its marketing spending to help accelerate the chain’s recovery
McDonald’s is significantly boosting its marketing spending in an attempt to accelerate recovery during the coronavirus pandemic, turning up the heat on smaller chains with less financial firepower.
In a video released Wednesday, CEO Chris Kempczinski outlined three new plans, the first of which is the significant uptick in marketing spend. "In our wholly-owned markets, this will amount to one month's worth of additional marketing support covered by the corporation to accelerate recovery and drive sales," he said.
While it was not immediately clear how much McDonald’s is adding to its marketing coffers, an increase of millions of dollars would deal a blow to its rivals, with restaurant operators across the board eager to lure back customers who have grown more accustomed to dining at home during the pandemic.
McDonald’s said the marketing investment will cover the U.S. and its so-called International Operated Markets, those countries where it handles operations including major markets such as Australia and Canada. The increase will equate to one month of the contributions it receives from its co-ops. While those contributions vary market to market, McDonald’s said they average about 4 percent of systemwide sales. The company is basing its investment on pre-COVID-19 sales levels.
In 2019, McDonald’s systemwide sales totaled $100.2 billion, a figure that includes sales from international markets that would be excluded from this plan. Based on that figure, an average month would bring in $8.35 billion, and 4 percent of that monthly total would equal $334 million. The total investment will be somewhat lower, however, as that figure includes sales for some markets excluded from this plan.
The moves come as some of the company's U.S. restaurants begin reopening limited seating areas for in-restaurant dining. In the U.S., McDonald’s plans at the restaurant level include having staffers wear masks and gloves, as well as offering masks to diners in places where they are required. Like other major restaurant operators beginning to reopen, such as Burger King parent Restaurant Brands International, McDonald's will spread out diners by having some seating areas marked as closed. And instead of hovering near the counter for dine-in orders, the food will be brought to the table in double-folded bags, McDonald's said.
The company’s statement and Kempczinski’s video didn’t outline which ad campaigns McDonald’s would focus on with the increased marketing spending. Last month, McDonald’s said its plans included emphasizing breakfast to help kickstart sales at that time of day, which have fallen as fewer people are heading out to work and school.
Kempczinski also said the world’s largest restaurant company would offer financial support to the franchisees who have been hardest hit during the crisis, and special assistance to those facing unique circumstances, such as offering a lower rent structure in places where restaurants continue to be delivery-only for now.
McDonald's first-quarter comparable sales fell 3.4 percent, and systemwide sales fell 4 percent.