McDonald’s Focuses on Digitization, Partnerships, and Health to Compete with Rivals.
McDonald’s, the largest fast-food chain globally, has faced a decline in global sales for the first time in nearly four years. The company attributes this drop to a decrease in U.S. customers, offset by price increases, the ongoing war in the Middle East, and reduced demand in China.
Despite these challenges, McDonald’s is not alone in navigating tough times in the food industry. Changing consumer preferences, increased competition, and the rise of food delivery services like Uber Eats and DoorDash are affecting many companies.
Adapting Sales Strategies
McDonald’s, which started as a single restaurant in San Bernardino, California in 1940, now boasts over 39,000 locations in more than 100 countries. The company continues to adapt its sales strategies to maintain its market position.
Digital Transformation
McDonald’s has embraced digital technology to enhance customer experience and boost sales. The company has invested heavily in self-ordering kiosks, mobile apps, and digital menu boards. These innovations aim to reduce wait times and improve order accuracy, addressing key customer concerns.
Delivery Partnerships
In response to the growing popularity of food delivery services, McDonald’s has partnered with major platforms like Uber Eats, DoorDash, and Just Eat. The McDelivery channel, launched in 2017, now operates in over 32,000 restaurants across 100 countries. By leveraging the technology and logistics capabilities of these delivery giants, McDonald’s can maintain control over the customer journey and customize promotions more effectively.
Menu Innovation
To appeal to changing consumer tastes and health-conscious diners, McDonald’s has introduced new menu items and modified existing ones. The company has added more salads, wraps, and plant-based options to cater to vegetarian and vegan customers. In the UK, McDonald’s has partnered with Beyond Meat to offer the McPlant burger, while in the U.S., it has tested the P.L.T. (Plant, Lettuce, Tomato) burger.
Health-Conscious Offerings
McDonald’s has also focused on improving the quality of its ingredients. The company has committed to sourcing sustainable beef and using cage-free eggs in its products. Moreover, McDonald’s has announced a strategic partnership with Google Cloud to integrate generative AI solutions across its restaurants worldwide. This collaboration is expected to accelerate automation, reduce complexity for crew members, and enhance customer experiences.
Competitive Landscape
The fast-food market is highly competitive, with major players like Burger King, Wendy’s, and KFC constantly vying for market share. To stay competitive and combat global market challenges, McDonald’s has implemented initiatives to address evolving consumer preferences for convenience and digital interaction.
The “Accelerating the Arches” strategy focuses on maximizing marketing, enhancing core menu items, and expanding digital, delivery, drive-thru, and development capabilities. Meanwhile, the MyMcDonald’s program aims to boost customer engagement through personalized offers and a loyalty scheme, targeting 250 million active members by 2027.
Chris Kempczinski, McDonald’s President and CEO, stated to McKinsey: “We’re doubling down on our digital, delivery, and drive-thru channels to meet our customers where they are and provide them with a seamless McDonald’s experience.”
Through these strategic adaptations, McDonald’s aims to overcome current challenges and sustain its position as a leader in the fast-food industry.