McDonald’s may want to replace The Grimace with a new mascot called The Scowl. If the marketing department needs a model, it could use investors who were on the company’s quarterly conference call Monday with financial analysts.
Their faces are probably still frozen in suck-a-lemon mode after hearing acknowledgements that Big Mac’s latest promotional efforts weren’t exactly barnburners.
CEO Don Thompson readily admitted that two of the chain’s traffic-builders from the past, the Monopoly sweepstakes and Mighty Wings, failed this time around to offset “current guest count trends.” Hence McDonald’s flat domestic same store sales for the third quarter, he and other executives suggested.
He found fault in particular with Mighty Wings, Big Mac’s riff on Buffalo-style chicken wings. The limited-time product didn’t exactly disappoint, he said, but “performed at the lower range of our expectations.”
Thompson explained that the $1-a-wing price might’ve been a little too rich for customers still feeling jittery about the economy. Also, “the flavor profile was slightly spicy for some consumers,” he added.
He shared some of his thinking on pricing in general, noting that McDonald’s needs to have products selling for about $2, which he characterized as a realistic trade-up for Dollar Menu fans.
His comments underscored how elastic the perception of value can be. For instance, a $5 price is perceived as a bargain for a 20-piece Chicken McNugget order. “There’s varying levels of affordability, and we still continue to have our Extra Value Meals and premium-based products,” said Thompson.
Nor is the Dollar Menu going away, he stressed. Although the items on that everyday roster of specials generate just 13 percent to 15 percent of sales, “you’ve got about a third of the customers that will leverage that Dollar Menu in some form or fashion,” Thompson said. In other words, people use it for add-ons, or perhaps it’s the draw that gets them through the door in the first place.
The CEO was served up an opportunity to blame softening sales on the government shutdown, but said the impact was minimal and limited to units located near federal facilities.