McDonald’s Kept Its Mojo in 2008
Healthier food offerings, expanded hours, and sparkling new facilities have been keeping McDonald's on top in the past year, allwing it to counter downward economic trends with stronger-than-expected sales in the US and abroad,
writes the International Herald Tribune.
In November,
global comparable sales went up 7.7%--the 55th consecutive month of increase--during one of the toughest months for the economy and the restaurant industry.
And though the stock market lost a third of its value in 2008, shares of McDonald's rose nearly 6%, making it one of only two companies in the Dow Jones industrial average to gain in value. (The other was Wal-Mart.)
(See the New York Times
charts of same-store sales, number of restaurants, revenue, and share price for the last eight years.)
Asked whether the company is recession-proof, CEO Jim Skinner said McDonald's was "recession-resistant." He is not sure whether it is "depression-resistant," though, he said.
McDonald's has not always been flying high. In what experts refer to as the company's "dark days," the mid-1990's were a struggle as service, cleanliness, and the brand's reputation started to decline.
Sales were sluggish and critics were plentiful--from animal-rights activists, environmentalists, and nutritionists to everyday consumers who had read the best-seller "Fast Food Nation," an exposé of the fast food industry and its contribution to the nationwide obesity problem.
But the company rebounded, thanks in part to an internal document called "Play to Win," which emphasized the importance of quality and service in the restaurant experience rather than low price and convenience.
McDonald's saw the importance of adapting to new consumer patterns, such as the propensity to snack as opposed to eating meals and the increase in the number of drive-through customers. As a result, it increased the number of drive-throughs and expanded service hours to capture early and late-night diners.
Management made changes to the menu, scrapping the super-size menu and adding healthier options like chicken, salads, yogurt, and apple slices, which lured parents looking for a way to feed their kids--guilt-free.
It also upgraded the coffee by buying higher-quality beans, using better equipment, and filtering its water. Sales of drip coffee went up 70% in the two years since the upgrade, said Ralph Alvarez, McDonald's president and COO. And McDonald's lattes are cheaper and more convenient than those at Starbucks, one customer pointed out.
Some of the more "upscale" recent additions (salads, premium sandwiches, espresso drinks)
were re-evaluated, however, when consumers began to spend less
over the summer. McDonald's decided to put more emphasis on its famous Dollar Menu, though it faced the challenge of keeping the price $1, as higher prices for beef, cheese, and fuel inched costs upward.
Still, efforts to add to the McDonald's physical dining experience, such as newer buildings with trendy furnishings, flat-screen televisions, wi-fi connections, and videogames, have been well-received by customers.
