McDonald's to unlock power of local regions

by Eric Schroeder
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Pete Benson, chief administrative officer of McDonald's, said the fast-food company is focusing on 22 local regions in the United States.

BOSTON — McDonald’s Corp. plans to ramp up new product news in 2015. The way it goes about doing so, though, promises to be different than efforts in the past.

“Traditionally, in the last several years, we’ve really been focused on national product roll-outs that have been supported by national media and in all 14,000 restaurants around the U.S.,” Pete Benson, chief administrative officer, said during a March 5 presentation at the UBS Global Consumer Conference in Boston. “And while we’ll certainly see some of that also this year, in Mike’s (Mike Andres, president of McDonald’s USA) new organization, he’s actually created and really empowered each of our 22 regions to have a little more autonomy around product development, product promotion, products that are going to resonate more with the local consumer.”

Mr. Benson said McDonald’s may report its U.S. operations as one segment, but the reality is each of its 22 regions around the country is subject to different consumer trends and choices.

“The battle for market share is different in the Northeast than it is in Houston than it is in Seattle,” he said. “It’s different customer expectations, different competitive tests, and so kind of unleashing the power of those local regions to develop marketing and develop products that are going to resonate better with those local consumer groups. We think is going to be a more powerful approach to going after this.”

Mr. Benson cautioned that the change will not take place overnight. For now, McDonald’s is focusing on getting the new organization in place and is working with some of its regional leaders to take the strategy and run with it.

“We are doing a great job, and we’re working on kind of the education and all of tools they need to do this effectively,” he said.

As important as new products will be to the restaurant chain’s U.S. operations in 2015, simplification of the menu will be just as key, Mr. Benson said. He said the company continues to look at slow-moving items and taking them off the menu, but McDonald’s also is looking at how it displays and markets certain products.

“It could be something like maybe in the drive-thru, you put up, you only display the items that make up 80% of our sales, and you could just significantly reduce the clutter and make it easier when you pull into that drive-thru to order something and get on with it,” he said. “So, that has benefits of improving the throughput and improving the order accuracy, because the crew is making fewer products and making them more frequently. And so you get a double benefit of that.”
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