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McDonald’s Pledges to Simplify, Localize, Customize

Relevance, simplicity, localization and customization were the watchwords of McDonald’s Corp.’s embattled response to a Q3 sales report that was even worse than the most dire forecasts. Insisting he is “confident in our ability to regain momentum,” President-CEO Don Thompson told analysts today that the brand needs to provide more choices and customization, which is what he says consumers are looking for. “We haven’t been changing at the same rate as our customers’ eating-out expectations,” Thompson conceded. “So we’re changing and changing aggressively.”

The "Create Your Taste" customization kiosks testing in Australia will be in three U.S. markets next year.

The “Create Your Taste” customization kiosks testing in Australia will be in three U.S. markets next year.

Whether it’s aggressiveness will be counter-productive remains to be seen. In January McDonald’s will simplify its menu, tossing out low-volume products (which he would not specify). At the same time, McDonald’s will restructure its U.S. system to give more local markets autonomy over their menu so they can add products they believe will do well in their markets. If Mozzarella Sticks or Chorizo Burritos (both currently testing) are somehow determined to be “relevant” to a region, the co-op can add them to the menu without an OK from corporate. This sounds like an echo of one franchisee’s recent complaint in the Janney Montgomery Scott survey that “They simplify…and then just add more products.” But Thompson insists it will make menus more local, relevant and appealing.

Core products like Quarter Pounders will get more national marketing support.

Core products like Quarter Pounders will get more national marketing support.

Readers of BurgerBusiness.com already are aware of the next element of what Thompson calls the “McDonald’s Experience of the Future”: the “Create Your Taste” customization kiosks now testing in Australia. This site wrote about them earlier this month; others followed. But while McDonald’s Australia promises to have the build-your-own-burger kiosks in all 900+ stores there within a year, Thompson said just three U.S. markets will begin testing by the end of 2015.

Thompson once again vowed to ramp up the company’s use of digital tools, including the rollout of the Apple Pay mobile payment system to all its U.S. stores (including the drive-thru). A reprioritization of resources will help fund all these initiatives, resulting in fewer new stores than had been expected in 2014. “We are targeting to identify and redirect nearly $100 million in savings for future, long-term growth initiatives such as the digital strategy and McDonald’s Experience of the Future,” said Thompson.

McDonald’s U.S. comp sales were down 4.1% for September and 3.3% for Q3. Europe’s quarterly comps were off 1.4% while the Asia/Pacific/Middle East/Africa region was down 9.9% for the quarter. But at least these declines had more easily identified causes. Russia’s political game-playing, resulting in more than 200 McDonald’s stores undergoing examinations for health violations, and the closing of Crimea’s stores accounted for the bulk of Europe’ decline. The tainted-food scare in China (which accounts for 10% of global sales) that reverberated through Japan and Hong Kong continues to depress Asian sales. Thompson said it likely will take six to nine months to fully restore consumer confidence there.

McD’s Operators: Monopoly Has to Stop Sales Slide

Janney Montgomery Scott analyst Mark Kalinowski has lowered his projection of McDonald’s Corp.’s September same-store sales to -3.6% from -2.5% based on a survey of 32 domestic franchisees’ opinions. The company will report September and Q3 sale on Oct. 21; the consensus forecast for September is -2.7%.

The Janney survey also finds that McDonald’s operators are heavily relying on the current Monopoly promotion to stop the ongoing sales slide.  “Everything depends on Monopoly,” one franchisee told Kalinowski.

McD_MonopolyGame“Hopefully Monopoly will give us a few more transactions,” said another. “Sales are trending down but Monopoly will help sales since it [did] in the summer of 2013 even if it will not help profits,” another operator said. “I am counting on Monopoly to stop the bleeding,” said another.

One franchisee said, “McRib should prevent further declines.” But the company has said that this fall’s McRib promotion will be a local option, not a national effort, which could reduce marketing support.

So what’s gone wrong? Franchisees pin blame for McDonald’s sales slide on a number of factors. “We just have nothing new to offer our customers,” was one explanation. Another cites “total loss of momentum.” Corporate management is a frequent target for these operators. “We are leaderless,” says one franchisee. “McDonald’s Corp. is scrambling to find answers to their problem,” says another. Click here to continue reading McD’s Operators: Monopoly Has to Stop Sales Slide

The Works Has Beer Burgers On Tap

Works_BeerGogglesWorks_BarkingAtMyCow2Burgers and craft beers have gone steady long enough to worry their parents but Canada’s The Works Gourmet Burger Bistro chain is thinking marriage with two limited-time beer-infused burgers and a third with a touch of root beer. The burgers will join the menu at its 25 Ontario and one Newfoundland location on Oct. 20, 2014, and stay until Jan. 4, 2015.

As with all Works burgers, the Beer Goggles Burg (shown at l.) starts with a patty of 100% Canadian beef. It’s then beer-battered and topped with bacon, lettuce, tomato, red onion, pickles and a creamy sauce of Moosehead beer and Cheddar. The Works’ beer selection also is 100% Canadian. The Barking At My Cow (at r.) tops the beef patty with smoked brisket, Barking Squirrel beer-braised onions, Jack cheese and bacon and is finished with Barking Squirrel beer barbecue sauce.

For those shying away from alcohol or who just love root beer, there’s the Root For Mah Piggy. That’s beef topped with Jones root beer barbecue-glazed pulled pork, crunchy onion strings with house-made root beer barbecue sauce and lettuce and tomatoes on a warm toasted pretzel twist. All three burgers are priced at CAN$15.31 and with any of them, a 20-oz. pint can be had for only CAN$4.98.

The beer burger specials follow The Works’ “Get Stuff’d” LTO, which featured burgers stuffed with pulled pork, cheese or a combo of jalapeno, banana and chipotle peppers. The chain’s basic burger menu is itself a sight to behold, boasting several dozen clever builds. Ground chicken, turkey and Canadian elk, as well as veggie and mushroom-cap patties, are always available.

Grind Modern Burger’s Comeback Story

GrindModern_Burger1 This time Rick Boyd believes he has the right match of concept and location. In March he closed his Grind Modern Burger restaurant in Eagle, Idaho, but vowed to relocate and return. On October 10, Grind reopened in a former brewpub in downtown Boise. Boyd reevaluated the concept, keeping some elements while discarding others and adding new ones. He spoke with BurgerBusiness.com about starting over as a burger brewery and about the concept’s expansion plans.

How long had the Eagle location been operating before you closed it down?
Eight months. The demographics in Eagle didn’t line up with what we were trying to do. It’s an older bedroom community that skews toward retirees. There aren’t a lot of young people. It was more of a high-end, cocktail-oriented crowd.

Why had you opened there?
Well, it’s an under-served market. There aren’t a lot of restaurants there but there’s a sizable population in that section of town. We just didn’t appreciate that they were all in their 70s and went to bed at 7 o’clock.

So we had an opportunity to move to downtown Boise in a space that has its own brewery and pick up a liquor license, which is very hard to come by in Idaho. It all has worked out really well for us. It’s an established location and we got a good price on it, so it was a good move all around.

You had the chance to reevaluate everything and reengineer the concept?
Exactly. We streamlined the menu and made upgrades to some things we kept. And during the eight months we were closed I spent a lot of time traveling around the country and researching other concepts, picking apart what they do and thinking about how we might implement or improve on their ideas. I was all over California, Arizona, Washington, Oregon and Texas.GrindModern_Storefront

Were there standouts that come to mind?
Well, we visited Umami Burger. We really liked the presentation of their burgers. Hopdoddy Burger Bar in Dallas was one of the few, after Umami, that has a full bar. So we looked at their cocktail program. Most were craft-beer driven, which worked out well since we scored the brewery here. We came away with great insights that we tried to incorporate in our own way.

Your menu remains burger-focused?
Oh yeah. The Eagle menu included pizza, mac ‘n cheese and things like that. We’ve done away with all that and maybe 90% of the menu now is burgers. We have some appetizers, entrée salads, fries but mostly it’s our Niman Ranch burgers.

We also have a veggie burger that we developed in house. It’s beet and brown rice based. The one we had before was a mushroom-based burger and we never were a big fan of it and we always wanted to rework it.

We adjusted our burger grind a bit. With the higher volumes we’re projecting we aren’t able to grind all our meat in house. There isn’t room for the size of the equipment that would need. But there’s a local company that handles our beef grinding.

Our salmon and chicken burgers we’re still grinding in house. It’s a 100% salmon burger with no fillers. We use the salmon trim to make a binder that’s just a salmon mousse with spices ground in. It’s a fantastic product. It looks beautiful when it comes off the grill. Click here to continue reading Grind Modern Burger’s Comeback Story

McDonald’s, MythBuster Launch Food Q&A

McDonald’s has enlisted professional skeptic and former “MythBusters” co-host Grant Imahara for its latest attempt to counter what it says are some of the persistent myths about the quality of its food. The “Our food. Your questions” campaign begins today (10/13) with TV spots showing real people’s questions and an invitation to consumers to pose questions via social media. Imahara is featured in a series of webisode videos addressing consumers’ persistent doubts and questions.

Former "MythBuster" Grant Imahara seeks answers to questions about McDonald's food.

Former “MythBuster” Grant Imahara seeks answers to questions about McDonald’s food.

“We know some people—both McDonald’s fans and skeptics—continue to have questions about our food from the standpoint of the ingredients or how food is prepared at the restaurant. This is our move to ensure we engage people in a two-way dialogue about our food and answer the questions and address their comments,” Kevin Newell, EVP-chief brand and strategy officer for McDonald’s USA, told BurgerBusiness.com in an exclusive interview.

“The work we’ve done in the past has been one-way. We’ve made nutrition information about our food available for a number of years. But people  had to go find it. Now we’re inviting consumers to go on a journey with us to get those questions answered.”

McDonald’s earlier launched an “Our food. Your questions” website in Canada and then in Australia. Newell says the ongoing Canadian effort has seen “some very good results from the standpoint of how people perceive McDonald’s food.” Why will this effort succeed better than past campaigns? Newell says the key differences are its “two-way dialogue, the behind-the-scenes view into what really happens from farm to fork and the opportunity to bring in a MythBuster with great credibility in getting to the truth.”

"Does McDonald's even sell real food," asks one person in one TV spot from DDB Needham, Chicago.

“Does McDonald’s even sell real food?” asks one person in one TV spot from DDB Needham, Chicago.

Consumers are encouraged to pose questions via a new webpage, Twitter and Facebook. Webisodes will appear on all those media, along with YouTube. Newell said the company has set up a “command center” where “as questions come in we’ll have our people addressing them in real time.”

The first webisodes take Imahara to a Cargill plant where the McDonald’s beef supplier shows what goes into the chain’s burger patties. Just beef. No “pink slime.” The flash freezing of those patties is explained and defended as a way to retain rather than lose flavor. “Ask your questions and I’ll find out the answers,” Imahara says at the episodes’ close. He will visit other McDonald’s suppliers to answer questions about McNuggets, McRib and other food products.

“We get more questions about our beef than anything else; that’s why we’re starting off with beef,” said Newell. “This is the topic that gets the most energy with our customers so we’re taking it on right away.”

“What frustrates us is that when people don’t know us they tend to judge us,” Newell added. “We’re saying don’t judge us before you know us, and we’re giving you an opportunity to know us like you’ve never had before.”

McDonald’s UK Names My Burger Winners

McD_MyBurgerWinnersAfter five months—five times longer than the last UK election campaign—the winners of McDonald’s My Burger crowdsourcing competition have been announced. Each of the five winning burgers will get a one-week tenure on the menu between Oct.15 and Nov. 18, 2014, guaranteeing the burger chain that its LTOs will have some built-in popularity. It’s an idea McDonald’s easily could bring here in 2015.

Beginning in May, consumers were invited to try out a digital burger builder, allowing them to create their own burgers from among 80 possible ingredients (including 20 different bun choices). Each concept—and there were 98,325 submissions—could be seen online and voted for (a total of 213,573 votes were cast). In June, the field was narrowed to 12 by a panel of judges that included England rugby legend Phil Vickery MBE, McDonald’s representatives, an independent expert and a member of the public.

In announcing the competition, Alistair Macrow, SVP-Chief Marketing Officer for McDonald’s UK, said: “Customization and digital engagement are becoming an integral part of how consumers interact with companies and we want to continue to innovate as a brand. That’s why we’re giving our customers the unique chance to design their own burger online with the potential for it to sit side-by-side with the likes of the iconic Big Mac. To canvass the public’s support and pass the taste test of our judging panel, customers will have to think about what looks, sounds and tastes great.”

The first of the winners, joining the menu on October 15, is the Big Uno, a cheeseburger with double cheese, bacon and red onion. The chain isn’t divulging full ingredient lists for the winners yet, but the other four winners are the Sweet Chili Fiesta (chili sauce, bacon and pepper cheese); The Ultimate Supreme (with Swiss cheese on an oblong roll); McPizza Pepperoni Burger (pepperoni and Italian cheese); Big Spicy Bacon (bacon and pepper cheese).

McDonald’s does share a few interesting facts about the 98,325 burger creations submitted:

  • 22% were “classic” burgers
  • 20% had barbecue sauce
  • 11% had Tex-Mex flavor profiles
  • 9% were “super sophisticated” in ingredient choices
  • 9% had pickles
  • 8% had spicy ingredients
  • 2% had pineapple

[Adendum: Click here to see the My Burger winners in Sweden; Go here to see the five finalists in the Build Your Own Burger contest at Luxe Bar in Springfield, Mass.]

Johnny Rockets Eyes Retail as ‘Lifestyle Brand’

Johnny Rockets toasters or steak knives? It’s possible. The California-based chain has announced a new Johnny Rockets At Home program that will extend its brand to retail freezers, housewares, music and more. Orlando-based The Blackwood Group will represent the brand for licensing. This comes shortly after Johnny Rockets announced four new Route 66 prototypes for its restaurants, including a drive-in-movie concept, a drive-thru concept, a food truck and a mobile pop-up restaurant. A fast-casual Johnny Rockets Express concept also is part of its emergence as a “lifestyle brand.” BurgerBusiness.com spoke with James Walker, Johnny Rockets’ chief development officer, about the ambitious plans.

You’ve been so active, moving the brand into several new arenas. Is there a danger you will dilute the Johnny Rockets brand?
That’s an interesting phenomenon with Johnny Rockets. We have brand awareness that I would say, arguably, is more like what you would see with a brand with 2,000+ restaurant locations. So we have phenomenal brand awareness but our footprint is still quite small. We’re 330 stores and we have rabid fans in our customers base. So I would say we’re a long way way from the dilution problem.Johnny Rockets At Home

It’s something we talk about, certainly. With the new concepts, the CPG [consumer package goods] products, we’re making sure that we’re making long-term, wise decisions now to avoid that. But that’s not going to be a daily concern for some time. We have lot of brand space.

Does the Johnny Rockets At Home program involve more than just food?
It does. When you think of Johnny Rockets, the things that jump into most people’s minds are going to be our burgers, our chili cheese fries, our shakes. But we’re a lifestyle: We’re fun, we’re entertainment, we’re music. I guess you could call us retro. So hard goods like center-of-the-table items themed after Johnny Rockets, small appliances or things that carry on that heritage of music and fun make sense for the brand. Click here to continue reading Johnny Rockets Eyes Retail as ‘Lifestyle Brand’

McDonald’s Adding BYO Kiosks in Australia

McDonald’s is testing next-generation technology for build-your-own burgers that it plans to install throughout Australia over the next 12 months.

A McDonald's exec shows "A Current Affair" how the kiosk works.

A McDonald’s exec shows “A Current Affair” how the kiosk works.

For its BYO testing in Southern California, the chain is using an iPad-size screen mounted to the wall or ordering counter. But in one restaurant in western Sydney, Australia, McDonald’s has installed a tall, standalone touch-screen kiosk at which customers can choose all ingredients for the their burger and pay with a credit card there or with cash at the counter.

Diners can build a “Create Your Taste” custom burger beginning at AU$8.95 (US$7.80), with some add-ons carrying additional charges. Users also can choose to make their order a small or medium Create Your Taste Value Meal with fries and drink for AU$11.45 (US$9.98) or AU$11.95 (US$10.42), respectively.

Customers have the option of brioche or crusty bun or no bun. The next choice is the number of 110 gram (3.9 ounce) Angus patties desired, with additional patties at AU$1 each. Next option is choice of cheese and number of slices, followed by optional bacon, egg or cooked egg toppings (at AU$1 each). Sauces such as barbecue or chipotle mayo can be chosen. Fresh ingredients such as tomato, lettuce and Aussie favorite sliced beets carry no additional charge, but guacamole, grilled mushrooms, grilled pineapple or tortilla strips are each 50¢ additional. Click here to continue reading McDonald’s Adding BYO Kiosks in Australia