How McDonald’s is trying to right itself

McDonald’s blamed its poor sales performance in August on the food-safety scandal that erupted in China, but that doesn’t explain why same-store sales fell 2.8 percent in the United States. Headquarters hasn’t floated a diagnosis, but tests of potential remedies reveal where management sees a weakness. Here’s a roundup of the recovery efforts that are currently being tried.

Problem(s): Relevance, perceived quality
Solution: Going fast-casual
A two-unit test of a fast-casual-like McDonald’s, where patrons can custom-spec their burgers and orders are brought to tables by servers, has just been expanded to four stores, all in southern California. At $5.49 each, not including an upcharge for bacon, the prepped-to-order sandwiches command a higher price than, say, a Quarter Pounder. Management has not revealed any sales metrics on the experiment.

Problem: Throughput at peak times
Solution: Charter Apple Pay membership
In the time it takes to flip a patty, McDonald’s has become a pioneer in cashless payment. The chain will use much of its existing technology to accept the new digital wallet that Apple revealed this week. Coupled with a pre-ordering capability, the pay-with-your-phone option promises to increase the number of orders that can be processed during the height of the lunch rush.

Problem: Relevance, service perceptions
Solution: A “learning lab”
McDonald’s hasn’t said much about the facility it will use on the West Coast to study what CEO Don Thompson describes as “all elements of customer sensory perceptions.” But it has indicated that the “lab” will be a crucible for working out new service processes and methods—part of what Thompson termed a “service reset.”

Problem: Throughput during peak times
Solution: High-density prep tables
Essentially a double-sided prep table, the equipment promises to speed service because of the dual sandwich-production lines. Ingredients are also closer to the sandwich maker so there’s less reaching, according to management. Finally, there’s a refrigeration element to the tables, which is intended to keep garnishes fresher and crisper.  The tables were scheduled to be rolled systemwide by mid summer.

Problem: Insufficient value at dinner, particularly for families
Solution: Dinner boxes
Marketed under an array of names, including ones that connect the chain with professional sports teams, the dinner bundles pack enough food for two adults and two children at a volume discount. Specifically, each consists of two Big Macs, two cheeseburgers, four orders of fries and a 10-pack of Chicken McNuggets for around $10.

Problem: Overwhelming number of menu choices
Solution: Menu simplification
“We are streamlining our merchandizing menu board and product offerings,” Thompson said. “ “In addition to making it easier for customer sto order their favorite products, this will reduce complexity in our restaurants, which in turn should enhance accuracy and speed of service.”

Problem: Leadership doubts
Solution: New McDonald’s U.S.A. president
In one of the few instances when McDonald’s reached outside the corporation for a key executive (Thompson being another example), the company recruited Mike Andres from Logan’s Roadhouse to lead domestic and Canadian operations. It’s not as if Andres is a stranger, having served as president of McDonald’s central U.S. division under a different management structure. He also held the titles of president and CEO of Boston Market while it was still owned by McDonald’s.

Andres, age 56, succeeds Jeff Stratton, who is retiring at age 58.


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