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McDonald's Corp.'s unveiling of its $500 million "We Love to See You Smile" campaign is only one aspect of the fast-feeder's ambitious program to overhaul itself for the long haul--and for the better. To trumpet its renovation plans, the company recently staged a media tour of unprecedented proportions.

McDonald's U.S. President "Alan [Feldman] said he wanted to tell people that this is the new McDonald's," said Bob Scarpelli, chief creative officer of lead ad agency DDB Worldwide, Chicago, which handles the bulk of the chain's advertising.

Behind the smile is a $400 million "brand reinvention" program McDonald's Chairman-CEO Jack Greenberg began nearly three years ago. The ad campaign's unveiling was McDonald's chance to show how all its efforts link together and begin to shift consumer perceptions about the brand. Executives planned a huge splash they hoped would illustrate--through press coverage as well as the ads--that McDonald's will give customers the world's best quick-service experience through a renewed commitment to founder Ray Kroc's values of quality, service and cleanliness.

The company's whirlwind media junket over two days covered three major markets: Dallas, Denver and Orange County, Calif. The trip was designed to highlight the advantages of its Made For You kitchens, which enable making customized sandwiches hotter, fresher and faster; to show off new menu additions to win over what the company calls "veto-voters"--gatekeepers such as moms who don't eat McDonald's food; to display "refresh and regreen" projects to make stores cleaner and more inviting; and to demonstrate crew training programs created to engage customers with friendlier, more attentive service.


The company also was eager to tout new value initiatives and technology, including video customer-order displays and transponders to improve drive-through accuracy and speed; new menu boards with more food pictures to reduce clutter and increase guest tickets; and McMagination videogame kiosks to give another reason for kids and moms to visit McDonald's.

Several other senior executives joined Mr. Feldman on the tour. In each city, different corporate, divisional and regional executives explained the innovations showcased. Among the speakers were Larry Zwain, senior VP-U.S. marketing; Tom Ryan, senior VP-U.S. menu management/new concepts officer; Lynn Crump-Caine, senior VP-restaurant systems; Mr. Scarpelli; and various divisional presidents and operators.

Some of the units visited on the trip looked more like casual dining restaurants than fast-food joints, sporting hunt club decor and lush gardens. Others boasted high-tech drive-throughs that use cashless payment through toll road transponders. These are the McDonald's of the future.


By no means, however, is the process complete. The 750,000 gallons of paint, 100,000 newly planted trees and 130-second average drive-through times--the lowest in three years--are just initial improvements, said Mr. Feldman. So too, is the employee turnover rate, down for the fifth year in a row even as crews have swelled by 5% to 10%.

Each store had been thoroughly primed. Mini-award ceremonies were held within earshot as reporters received briefings from the store operator. At a restaurant in Aurora, Colo., for example, one of six crew persons with corsages was awarded a monetary prize by the regional VP. Such ceremonies took place at nearly every stop.

At each store the counters were teeming with crew members, many in management uniforms. When asked whether the crew size was typical for the time of day, one operator said he brought in managers from other units so they could meet Mr. Feldman and the division president. Other store managers said they had only a couple more staffers than normal.

To improve customer service, the company trained 600,000 crew members to identify certain behavioral cues and translate those into service opportunities. Staffers do so through eye-contact, smiles and making pleasantries. "Our focus historically was in focusing on process execution," said Ms. Crump-Caine. "Now we focus on engaging the customer. It's less regimented."

For example, if a mother comes into a unit with kids and shopping bags in tow, a crew person might offer to take the order to the mother's table for her or to help with her bags, a service concept many grocery chains are using.

Not everything is about the customer, however; profitability is still king for the burger titan. "I don't make food, I make business cases," said new concepts officer Mr. Ryan, whose team created the Big Xtra burger and McFlurries. "We feed 43 million people a day. My goal is to elevate food to co-star status."


To do so, he interviewed heavy category users and found that customers wanted lighter fare and meal substitutes. He also found a quality gap. For example, shakes have been a core part of McDonald's legacy, he said. But shake mix as a percent of sales dropped as tastes changed and carbonated soft drinks grew. His remedy: triple-thick shakes, "calories be damned." Now, 450 units are testing the new shakes, while other units are using a stop-gap upgraded shake syrup.

Another menu challenge was winning over those veto-voters who want healthier food choices. Mr. Ryan's solution was McSalad Shakers and Yogurt Parfaits.

It is McDonald's challenge to provide more choice of taste than any competitor in the category, and Mr. Ryan's team has between 25 and 40 products in the development pipeline to test a number of emerging taste profiles--which he said may not make it into the everyday menu. "We're not committed to any one of them," he said. Among the trends he's watching and testing: More robust ethnic flavors that maintain a semblance of familiarity; portable foods; indulgent foods as well as balances to them; and fresher, cleaner flavors.

"We have an active interest in the snack occasion," said Mr. Ryan, whether as an add-on to a meal or between meals.


The company's bread-and-butter franchise, however, is kids. And to please them, McDonald's is testing videogame units called McMagination in 16 stores. A rollout is planned for later this month.

"McMagination gives us that extra dimension to compete with Burger King and others," said Art Sandoval, an owner-operator in Denver. The game units typically are located in the PlayPlace areas and targeted at young kids up to "tweenagers," those between 10 and 12 years old.

The fast-feeder has also updated the drive-through. The new pathway uses menu boards with more pictures, and, in 8,000 units, customer order displays confirm the order and price of purchases. With these advances in place, chain executives said they've lowered drive-through times to 90 seconds from the first keystroke of the order until the food is handed to the customer.

But even when prepared for the reporters' visit with additional staff, one store had a 129-second drive-through average for 663 cars, including 27% that exceeded 150 seconds. But that's still better than the company's three-year high of 170 seconds.

Not all operators are willing to give up their "face to face" system of taking orders, however. Such independence is just fine with Mr. Feldman "as long as they provide speed and accuracy."


McDonald's is claiming its food has improved, too. The chain's research showed a 10% boost in food scores--the in-house ratings that measure whether the food is hot, fresh, appetizing and flavorful--from the first quarter of 1998 to the same period in 2000, said a spokesman. He noted scores for friendly, courteous service and speed of service also improved. But the company wouldn't reveal its current score.

According to syndicated research, there is certainly room for improvement. The only categories the chain was highly rated in were convenience and kid appeal. "Consumers don't rate their food highly, particularly with respect to other chains," said Bob Sandelman, president of Sandelman & Associates, which tracks quick-service restaurant chains.

The system isn't perfect, Mr. Feldman conceded, a comment repeatedly echoed by staff through the trip. Only about 75% of the operators believe the company is headed in the right direction, he said. "Any administration would [be satisfied with] that approval rating," he added.

Mr. Feldman said he will feel the program is a success "when we clearly live up to the goal of being the best QSR experience. We're not there today."

He said he has already seen good results, but that it will take more time with repeated customer exposure to ads and in restaurants. "I'm confident we're on the right track."

The long road, however, is still ahead in convincing consumers of that. "Time will tell and customers will tell us," he said.

Copyright July 2000, Crain Communications Inc.

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