Lessons from the 'Big Mac'

OAK BROOK, Ill. -- Like many survival stories of these economic times, QSR giant McDonald's likes to stipulate that it was recently "recession-resistant" rather than "recession-proof," as often quoted by its CEO, Jim Skinner.

"Compared to just about all other food service establishments, they rode out the recession really well," Don Stuart, COO of Kantar Retail in Wilton, Conn., told Convenience Store News. "They offer a higher level of freshness in everything they do, and as a result, they gained share of stomach. Just look at their sales in relation to inflation and population."

The leading fast-food chain continues to show growth. In the U.S., comparable sales increased 2.7 percent for February "driven by continued strong demand for McCafe beverages, McDonald's popular breakfast, featuring new Fruit & Maple Oatmeal, and everyday value throughout the menu," according to a March company release. It went on to state that McDonald's U.S. remains "committed to its long-term strategy of attracting customers by enhancing the restaurant experience, expanding McCafe options to become a beverage destination, and leveraging core products like Chicken McNuggets and the burger lineup."

Clearly, some of these foodservice strategies could apply to forward-thinking convenience stores. "It's really all about changing with the times and staying relevant to our customers," Ashlee Yingling, McDonald's company spokesperson, told Convenience Store News in an exclusive interview.

Breakfast continues to be a good growth area for the company, according to Yingling. In the breakfast business for more than 30 years, McDonald's launched its Fruit & Maple Oatmeal in January.

"It extended the offering for us. We heard from folks that they were looking for new options that were quick, on-the-go and better-for-you," she explained. Available all day, Fruit & Maple Oatmeal is made-to-order, with or without brown sugar, has 290 calories and provides two servings of whole grains and 20 percent of the Daily Value for dietary fiber, according to a company release. McDonald's collaborated with the Whole Grains Council, which reportedly backs up the oatmeal as a good source of whole grains. The suggested retail price for Fruit & Maple Oatmeal is $1.99.

In May 2009, McCafe was launched and "was an evolution with our coffee segment, espresso-based," said Yingling. "It continues to evolve as we look at other espresso-based drinks."

McDonald's is also currently in test for over a year with a frozen strawberry-lemonade blended ice drink, she said. So far, it's been well-received in its test markets of Texas and Michigan. Beyond that, the chain has repackaged its milkshakes with more appeal. "Before they were served in soda cups and now we're packaging them in a clear McCafe cup with whip cream and a cherry and a dome lid," Yingling said.

Even with added variety, McDonald's entire menu is offered on a "made for you" platform, according to Yingling. "You can order anything on the menu, and it can be changed to be made without the brown sugar, without the fruit, without the cheese. Whatever it might be, you can even get our smoothies without yogurt if you want."

The chain wants to "give our customers options they feel good about eating," Yingling told CSNews, explaining that the chain offered "variety in its menu for decades now," and most recently added salads in 2003 and snack wraps in 2006. "We also offer smaller portions, grilled options -- there are plenty of options you can get customized to make it fit your taste profile or nutritional needs. It's not about categorizing it as 'healthier,' it's about providing options customers feel good about eating."

Also, promotions are not really a big focus, Yingling said. However, the chain offers regional items on a limited time basis, such as Shamrock Shakes, as well as national seasonally-limited items, such as McRib sandwiches. "We do these occasionally, but our business is clearly not contingent on the next promotion," Yingling noted. "We believe in providing everyday value across the board to our customers."

McDonald's still offers its dollar menu, but other items, especially newer ones, are offered as a value and not on some price promotions.

An Evolving Menu
When it comes to the menu, when the chain adds new items, it doesn't automatically slash an equal number of existing items. "There have been a few items that came off the menu, but it was not a result of adding more choice to it," she said. It's more about eliminating duplication.

One example of this is the Big 'N Tasty burger that was on the menu for a decade, but then when Angus Third Pounders were introduced "we saw the overlap and similarities and discontinued Big 'N Tasy," Yingling explained. The Mac Snack Wrap also came off the menu shortly after the Angus Snack Wrap came on. "It's just about realizing the similarities in menu items, then a decision has to be made about keeping both or not -- but it is not a decision we take lightly."

So is there good and bad in such expanded daypart offerings? Stuart praised the chain for its "big innovation" with McCafe, as well as the delivered value in oatmeal, salads, wraps and more.

"But I do think they might be challenged -- both financially and operationally -- since they offer such an incredible amount of variety," he explained to CSNews. "The menu may be getting a little long in the tooth and it may conflict with their ability to deliver fast convenience from an operations perspective. Perhaps they need a hard look at menu optimization if they want to keep focusing on operations and profitability."

Operationally speaking, Yingling holds firm that "our folks have been trained for any new item rollout to be able to serve it in fast service times -- it is our business to be quick-serve," which she said translates to about a minute-and-a-half from the order point to when the customer gets the food.

With regard to the oatmeal, she mentioned customers can order it all day because "it is not contingent on breakfast equipment needs." Everything is tested ahead of time to ensure that it is easy for the crew "to make it within the time parameters of what customers are used to at McDonald's," she said.

Getting a Fresh Look
Part of the satisfaction of happy foodservice customers can be attributed to a happy foodservice environment, and Yingling explained the chain is staying relevant in ambiance, too, with a remodeling program currently in place. "We are changing what a typical McDonald's restaurant looks like," she said.

The remodeled versions have double drive-thru lanes, upgraded landscaping, interiors that are more inviting and "encourage you to stay awhile," with more comfortable seating and brighter colors, according to Yingling. The lighting has been enhanced, and there is free Wi-Fi in nearly all locations.

"It's a different experience from the McDonald's you grew up with," she stated.