Menu changes give McDonald's a boost

by Monica Watrous
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McDonald's chicken McNuggets with no preservatives
McDonald's sales accelerated following the introduction of Chicken McNuggets with no preservatives.

OAK BROOK, ILL. — Sales at McDonald’s restaurants in the United States accelerated in the most recent quarter following the introduction of Chicken McNuggets with no artificial preservatives, said Steve Easterbrook, president and chief executive officer.

Steve Easterbrook, McDonald's
Steve Easterbrook, president and c.e.o. of McDonald's

“Following the announcement, sales of McNuggets increased nearly 10%, and they are sustaining above previous levels,” Mr. Easterbrook said during an Oct. 21 earnings call with financial analysts.

Net income at McDonald’s Corp. in the third quarter ended Sept. 30 was $1,275.4 million, equal to $1.50 per share, which compared with $1,309.2 million, or $1.40 per share, in the prior-year period. Total revenues declined 3% to $6,424.1 million from $6,615.1 million the year before.

Global comparable sales advanced 3.5%, reflecting positive performance in all segments, including a 1.3% gain in the United States. The continued popularity of All Day Breakfast and McPick 2 value offerings also helped results.

McDonald's quarter pounder burger
McDonald’s also introduced new hamburger buns that do not contain high-fructose corn syrup.

In addition to removing artificial preservatives from Chicken McNuggets, McDonald’s announced a transition to chicken not treated with antibiotics important to human medicine and new hamburger buns that do not contain high-fructose corn syrup.

“Customer perceptions of McDonald’s have steadily improved over the past 18 months, and the third quarter marks five consecutive quarters of comparable sales growth across all business segments, with many markets gaining share,” Mr. Easterbrook said.

Still, the company remains cautious of near-term headwinds, “most notably in the U.S. as we lapped the very successful introduction of All Day Breakfast, which was immediately popular with customers,” Mr. Easterbrook noted. “However, we’re not managing the business quarter by quarter. In fact our commitment to investing in the business is stronger now than ever. We’ve taken action in the areas that matter most to customers.”

McDonald's all day breakfast sandwiches
McDonald’s recently launched the second phase of All Day Breakfast with an expanded menu that includes muffins and biscuits as well as McGriddle sandwiches.

To sustain momentum in the U.S. market, McDonald’s recently launched the second phase of All Day Breakfast with an expanded menu that includes muffins and biscuits as well as McGriddle sandwiches. The company also has introduced digital menu boards in more than 90% of U.S. restaurants.

“These new menu boards enable us to showcase the quality of our food with fresh photography,” Mr. Easterbrook said. “Because they’re less congested and better organized the menus now do a better job highlighting the broad range of choices available. The menu boards are also smart. They are built with a robust content management system that we haven’t even begun tapping into yet.

“When fully enabled we’ll be able to adjust what’s featured on the menu based on time of day or even weather conditions. We’ll be more relevant to customers as we remind them about our ice cream cones and McFlurries on a hot summer day or handcrafted hot McCafe beverages if it’s chilly outside and they feel the need to warm up.”

McDonald's McFlurry and McCafe hot coffee
McDonald's smart menu boards will allow adjustment according to weather, such as promoting ice cream when it's hot or hot coffee when it's cold.

Going forward, McDonald’s will continue to emphasize value, focus on food quality and improve operations.

“We’re building for the long term and not getting shaken up by strategy,” Mr. Easterbrook said. “We will still fight for market share at local level, we’re going to leverage All Day Breakfast through quarter four into quarter one. We’ve got some exciting promotional activity in quarter one that we’re looking forward to.

“We’re not sitting on our hands here, but at the same time nor are we going to get drawn into a year-on-year comp strategy at all.” 
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