McDonald's U.S. Focus Turning to Core Products

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McDonald's U.S. Focus Turning to Core Products


OAK BROOK, Ill. -- Speaking during the company's fourth-quarter earnings conference call this week, McDonald's Corp. executives said the quick-service restaurant chain will contend with headwinds this year.

The chain's U.S. system, which includes more than 14,000 McDonald's locations, is facing commodity cost inflation that the company projects to rise between 4.5 percent and 5.5 percent, with increases in the mid-teens for beef. Meanwhile in Europe, food cost inflation likely will compound continued pressure from austerity measures in several countries.

To keep growing in this environment, though, McDonald's Chief Executive Jim Skinner said the chain intends to stick to its "Plan to Win," built around menu innovation, broadening accessibility and reimaging restaurants, as reported by Nation's Restaurant News.

"Our overall business model continues to serve us well in any environment, as long as we propel ourselves with the proper levers of our business," Skinner said. "The most important thing around the world for the past eight or nine years has been everyday affordability."

Skinner said several new products will join McDonald's menu in 2012, including the Cherry Berry Chiller frozen beverage, Blueberry Banana Nut Oatmeal and Chicken McBites, a popcorn chicken limited-time offer that began a nationwide promotion Monday. Yet, the chain plans to drive much of its sales this year through "core" items, like Big Macs and Chicken McNuggets.

McDonald's President and COO Don Thompson noted several areas on and off the menu that could provide sales and profit growth to McDonald's in the coming year. While its breakfast and McCafe menus maintain their momentum, opportunities also exist for limited-time offers, he said.

"What the U.S. has not done as much yet is tap the global pipeline, like the more premium sandwiches from Europe," he said. "We still have opportunities there in the U.S., and the team is looking at that."

Operations-related opportunities exist as well, like opening more restaurants for 24-hour service and leveraging a new point-of-sale (POS) system for increasing capacity at peak hours.

According to the NRN report, Skinner said improving throughput at peak times comes down to more than the double drive-thru, a key feature of the more than 900 remodels in the United States last year, or a new POS system. Practices in scheduling and positioning in the dining room also enable McDonald's to handle its growing guest counts.

"It's not all technology," Skinner said. "A lot of it is scheduling, positioning and planning for the shift to facilitate faster service, which begets more customers."

This year, the chain plans to remodel more than 800 U.S. locations, the report stated.