Menu McStrategies

by Bernard Shire
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It’s early morning and inside the McDonald’s restaurant, six guys are sitting around a table, drinking coffee and having breakfast. They appear to be retirees and it turns out they are. They get their day started by coming here two or three times a week. At this McDonald‘s and others across the U.S., it’s quite common to see men and women gathering in groups for breakfast or lunch.

“There’s no doubt McDonald’s has become more of a ‘destination’ restaurant than it used to be,” notes Danya Proud, senior manager for U.S. communications for McDonald’s Corp., Oak Brook, Ill. “Oh, there’s still a lot of takeout, the drive-through, especially for people headed to work. But many more people are eating in the restaurant now and spending time here.”

The first McDonald’s restaurant was opened by its founder, Ray Kroc, on April 15, 1955, in Des Plaines, Ill. The chain got started as a simple red and white tiled restaurant selling 15-cent hamburgers, French fries and sodas. Those three items were the basics of the menu. French fries were made from fresh potatoes peeled, sliced, blanched and fried. Coca-Cola and root beer were drawn from barrels. The all-male restaurant crew wore dark trousers, white shirts, aprons and paper hats.

Since then, the restaurant chain has come a long way. Today, there are more than 31,000 restaurants serving more than 58 million people in 118 countries each day. More than 75 percent of these restaurants are franchise operations, owned and operated by men and women operating their own businesses. McDonald’s menu items have become iconic in the world of fast-food, including the Big Mac, Quarter Pounder, World Famous Fries, Chicken McNuggets, Egg McMuffins and Happy Meals.

But other newer items have become well-known in their own right, including the Dollar Menu, the Angus Burger and free WiFi at most of its U.S. locations.

“I think one of the secrets to our great success is that as our customers here in the U.S., Canada and around the world have changed, McDonald’s has changed with them. And we are continuing to change,” Proud says.

There’s no doubt the menu trends at McDonald’s are the secret behind the chain’s success. The company often leads the fast-food chain pack in deciding what’s coming next. But ask Proud how decisions are made about what kinds of meat, poultry and other items are to be found on the McDonald’s menu, and she replies, “Our customers tell us, and we really follow what they want.”

She explains McDonald’s got started as a hamburger business, also selling French fries and sodas. “So the trends for our lunch menus here, for example, are dictated by our 26 million daily customers in the U.S. The menu items have to be what our customers have come for.”

The changes in people’s working styles over the last decade have had a great effect on the restaurant business, and the lifestyle changes impact the fast-food giant, too. “Eating-out occasions have changed,” Proud says. “People are spending more time in their cars, they are commuting much longer distances to work, there’s a lot more multi-tasking going on.”

In fact, a new report from Mintel shows restaurants catering to customers’ convenience are poised to do very well as the nation slowly but surely moves out of the recession of the past few years.

And comfort foods are part of that convenience. “There are a variety of options for customers to choose from and some may be more indulgent than others, even though we’ve always had the McDonald’s basics,” she notes.

Accentuating breakfast

As a result of that, breakfast has taken on new importance for people, including commuters. So breakfast has become an increasing important focus for the menu teams at McDonald’s.

“Actually, we began reconfiguring breakfast in the 1970s,” says Proud. “Our restaurants didn’t even open until 10:30, when they opened their doors for lunch. We began with Egg McMuffins and Breakfast Platters. Later, we came out with something revolutionary, our breakfast sandwiches, hand-held products containing sausage or egg.”

The Egg McMuffin came to life in 1972. The whole idea of a “breakfast sandwich” was new, and this one featured egg formed in a circle with the yolk broken, a slice of cheese and a slice of grilled Canadian bacon. The invention of the Egg McMuffin opened a whole new area for McDonald’s – the breakfast trade – freeing the restaurant chain from concentration on lunch, for the most part.

That was the genesis of McDonald’s focus on breakfast. The company knew many people would eat breakfast out, maybe on their way to work, but would not take the trouble to cook breakfast for themselves at home.

A few years ago, McDonald’s began serving Southern-style chicken biscuits at breakfast. The Southern- style chicken biscuit was test-marketed, not surprisingly, in the South. “That was a first for us, and it did very well there,” she says. Now the menu item is served all over the U.S., where it continues to sell very well.

The company also decided to move into another menu item in a big way, one that sells a lot in the morning, but for many people throughout the day as well – coffee. Tied to its expansion of breakfast, this was a major move for a restaurant whose major drink had been a companion to hamburgers and French fries – sodas. “We believed with our push for breakfast, we could also make coffee popular in our restaurants, as well,” Proud says. The restaurant began its coffee expansion by selling plain, old Joe. But in the fall of 2008, the restaurant chain decided to launch a designer coffee menu, to be served in a café-like setting. It began serving up lattés, cappuccinos and mochas – the McCafe brand of designer coffees. “Now, we have a big push, including hot, iced and flavored coffees,” Proud says. Last year saw the introduction of espresso-flavored coffees.”

Another new addition to the McDonald’s menu is the “snacking meal” category. “People are eating smaller meals today,” Proud says, “so we have the Mac Snack Wrap, a play on our Big Mac. The ‘snacking meal’ meets the desire of customers for more portable meals.”

Proud says the restaurant chain uses a “core menu” for most of its locations in the U.S. And hamburgers remain at the heart of the core menu. “If you look at our sandwich menu, you’ll see hamburgers, cheeseburgers, the Quarter Pounder and Big Mac [which remain McDonald’s two signature products]. We moved into the premium area with our Angus burgers,” she says.

Chicken comes on strong

Almost 30 years ago, the restaurant chain moved into chicken in a big way, “with our McChicken Sandwich and our Chicken Nuggets and a large number of chicken sandwiches,” she points out. Now, for a restaurant known for its hamburgers, chicken has become an even bigger part of McDonald’s menu. Why?

“Obviously, chicken has become a very popular protein, and it’s a very nutritious source of food, as well,” Proud says. “Plus, chicken really gave us a great chance to diversify our menu, to add new options to our menu. And that’s what we always wanted to do.”

McDonald’s tests items in a small number of stores and markets, sees what the reaction is and if positive, puts the item on its core menu across the U.S. The ideas for the testing of products come from what customers in McDonald’s 14,000 American restaurants are looking for,” she says.

McDonald’s menu planners actually work with customers, getting ideas for products from customer preferences. The company spends a lot of time testing items in restaurants, generally at least six months, before a decision is made whether the product will be added to the menu or not. “Snack Wraps came onto our menus in six months. But it took two-and-a-half years before Angus burgers were added to our national menu.”

McDonald’s spokespeople won’t talk about what is being tested for addition to menus. But some years ago, the chain was facing weak customer traffic in the evenings. So, the company considered developing a menu without sandwiches or burgers.

It thought about selling pizza, pasta and other entrées. The pizza idea was put on hold. But the experiment is an illustration of what restaurants will do to bolster their menus.

Proud says value has always played a major role in McDonald’s menu planning. “That’s been a fundamental of our business since 1955,” she says. “We’ve always emphasized cleanliness and value.” The restaurant chain was able to react to the onset of the current economic recession with the launch of its Dollar Menu and more recently its Dollar Breakfast Menu. “With our Dollar Menu and our premium menu, we’re able to satisfy both ends of the marketplace, and everything in the middle as well,” Proud says. The Dollar Menu includes items like an Asian chicken salad or a side salad, a burger, four pieces of chicken nuggets and a coffee for 50 cents. And last month, McDonald’s premiered its Breakfast Dollar Menu, after testing items in Chicago and a few other markets for several months, including a sausage McMuffin, a sausage biscuit, a sausage burrito, hash brown potatoes, and a small coffee.

There are regional preferences in various parts of the country for menu items, but the company has moved steadily toward a national core menu in most of its restaurants in the United States. Finding virtually the same menu items everywhere seems to be one of the great keys to McDonald’s success.

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