[12/1 Update: See announcement of McD's President Ralph Alvarez's impending retirement here.]
McDonald’s redesigned midtown Manhattan restaurant, reimagined with what the Associated Press called “European style,” received an astonishing amount of wide-eyed coverage and surprisingly little analysis. French architect Philippe Avanzi’s interior is nice but it’s most important as a tangible indication of a significant shift in thinking ongoing at the world’s largest restaurant company.
McDonald’s is undergoing Europeanization, a transition to a more sophisticated brand identity that is spreading more rapidly across its global menus than its interior designs.
To see this shift, consider “The Festive Menu” introduced last week in the United Kingdom and the new “Savoury de McDonald’s” hamburger recently launched in France and the “M Selections by McDonald’s” menu just added in Australia (product descriptions are below). These and other global menu revisions–centered on ingredient quality–present McDonald’s food in almost “couturier” terms. They make Carl’s Jr.’s Six Dollar Cheeseburger, Burger King’s Bourbon Whopper or even Wendy’s Bacon Deluxe look very “fast food.”
Such upscale offerings as the Savoury and M Selections aren’t in U.S. McDonald’s restaurants, but they will be because the company–McDonald’s Corp.–is heavily influenced by its European operations.
Take a look at McDonald’s sales through the first nine months of 2009 to see Europe’s corporate impact. Europe contributes 25.3% of systemwide restaurant sales but is 42.9% of McDonald’s company-operated sales (excluding franchise revenues). Despite the potential China holds, APMEA (Asia/Pacific/Midde East/Africa) accounted for just 18.6% of McDonald’s $53.3 billion in systemwide sales through this year’s first three quarters.
Europe’s increasingly more confident role within the McDonald’s empire is evident in the green background (replacing the traditional red) to the Golden Arches that the chain’s operations in Germany and France have adopted.
With McDonald’s Corp. Vice Chairman-CEO Jim Skinner at 65, it’s possible he will step down in 2010. President-COO Ralph Alvarez appears positioned to succeed him, but Denis Hennequin, president of McDonald’s Europe, certainly could be the corporation’s next president because of Europe’s significant role in the company.
httpv://www.youtube.com/watch?v=21mBERjCrzo Burger King Corp. Chairman-CEO John Chidsey wants his brand to take upscale steps as well. In October he announced the company’s intentions to refurbish all 12,000 of its restaurants with its flashy “20/20 Design” in order to assure “the continued delivery of a quality food experience that rivals casual dining.” This is an obvious reaction to what already is taking place globally at McDonald’s. It would be a more believable goal if it didn’t come from a chain having great difficulties convincing its operators to lower the price of Double Cheeseburgers. Convince them to invest thousands of dollars in lavish interior designs? It’s unlikely, at least not soon, for a company that posted a global +1.2% comp-sales performance in fiscal 2009 versus +5.4% the previous year.
McDonald’s Festive Menu just launched in the United Kingdom adds two new upscale sandwiches: The Great Cheese and Bacon burger on a bakery-style cheese-top bun and the Chicken and Bacon Supreme sandwich on a sesame-chive-topped bun. The menu also includes Cheese Melt Wedges “served with “a festive tomato dip,” custard-and-mincemeat-filled Festive Pies and a McFlurry featuring bits of elegant After Eight mints.
httpv://www.youtube.com/watch?v=9EeVIQ4MWi4 Australia isn’t Europe, but it has taken on much of McDonald’s Euro style. The most recent example is the “M Selections by McDonald’s” menu just introduced in Australia. Marketing reprises the “It’s a little bit special” theme used with the rollout of Angus burgers there this summer, and the Grand Angus and Mighty Angus burgers are included in the new menu.
But the new M Menu goes beyond burgers to include new Chicken Deluxe and Chicken Bacon Deluxe (available in Crispy and Seared versions) plus the Chicken Tandoori Wrap, Crispy Caesar Wrap and more. Australia’s “M Menu” echoes the fancy burger McDonald’s has introduced at “Le M” in France, Switzerland and Belgium, “Der M” in Germany and “Il Mac” in Italy.
The “Savoury de McDonald’s” burger is marketed in France with the tagline “Une composition au goût intense” (a dish with intense flavor). The build is a beef patty topped with bacon, tomato, Cheddar cheese, lettuce and two savory sauces, all served on a ciabatta roll (as are many of McDonald’s upscale Euro burgers, including the new Chicken Bacon Melt in Denmark). TV commercials for McDonald’s new Chicken Sensation sandwich in The Netherlands show a string quarter appearing when a customer bites into it. What other burger brand would try on such imagery?
Most QSRs like to talk about “barbell” menus that offer both dollar-menu and premium-price extremes, but McDonald’s is making money with it while many of its competitors struggle. As McDonald’s continues to fortify its premium-price menu—using ideas that already have proven themselves in Europe and elsewhere—it will further distance itself from those competitors.