McDonald's, the fast food behemoth, is aiming to regain customer loyalty by lowering prices after facing challenging times, which got worse during an E. coli breakout traced back to onions served at their restaurants in 2024. The company faced two consecutive quarters of decline. In the most recent quarter, McDonald's reported better results than was expected.
“In this landscape, the power of McDonald’s value and affordability platforms, exciting marketing and menu offerings, and world-class execution are working together to drive comparable sales results and guest count growth as we also accelerate new restaurant development,” McDonald’s CEO Chris Kempczinski said on the Q2 earnings call, according to Franchise Times.
Fair price points to win back customer loyalty
The fast-food giant reported second-quarter net income of $2.25 billion, or $3.14 per share, up from $2.02 billion, or $2.80 per share the previous year, according to CNBC. And revenue rose 5 percent to US$6.84 billion. Still, executives - and analysts - are worried:
"Reengaging the low-income consumer is critical, as they typically visit our restaurants more frequently than middle- and high-income consumers,” CEO Chris Kempczinski told analysts on the company’s earnings conference call, according to CNBC. “This bifurcated consumer base is why we remain cautious about the overall near-term health of the U.S. consumer.”
Realizing economic uncertainty caused by tariffs and geopolitical circumstances, along with rising inflation, is making reaching customers a challenge. After all, if the price point is out of range, they will not walk in and make purchases. In addition, in recent years, many people have tried to get healthier, which puts burger joints at a disadvantage. All these factors have led McDonald's to change its approach to customer experience (CX).
The Wall Street Journal recently reported that McDonald's is lowering the cost of its combo meals after some Big Mac combos had risen all the way to $18. This was a bad look for a company that made its brand all about affordable prices and speedy delivery.
"The move is part of the chain's push to restore its reputation for affordability, which has taken a hit with cash-strapped consumers," according to the article. "McDonald's has said that its new McValue deal menu is helping, but many consumers still feel the chain's menu prices overall are too high."
Negotiating to better prices
To win back customer loyalty, McDonald's spent weeks with restaurant operators discussing pricing. Reportedly, the negotiations yielded the following results:
- The company headquarters offered financial support if franchises agreed to drop prices.
- Franchises agreed to keep the cost of eight popular combo meals 15 percent below the sum of the individual items' prices.
- They will run $5 breakfasts, $8 Big Mac and McNugget combo-meal specials later this year as Extra Value Meals.
Better and faster CX
Making the food more accessible is another way McDonald's is reaching out to customers. McDonald's and DoorDash expanded their partnership with what they are calling a "new online ordering experience" in the United States. It allows users to order food via mobile, web or desktop without having to download an app or log into an account.
Another facet of this outreach is McDonald's loyalty program. The Franchise Times reports that one-quarter of U.S. business comes out of the program for frequent McDonald's diners and adds this:
"The company has reached more than 185 million 90-day active users across 60 loyalty markets, moving toward its 2023 goal to reach 250 million active users by the end of 2027."
Providing technology that simplifies ordering is a top priority as is an entire digital transformation strategy, according to CX Network's sister portal PEX Network. The article outlines how McDonald's is leveraging advanced to technology to make cooking time even faster, improve communications with customers and simplify ordering. Even the company platform is getting a makeover.
"McDonald’s digital transformation strategy is redefining fast food in the digital age with a focus on customer experience and digital innovation," according to an article on PEX Network written by editor Michael Hill. "That’s according to Brian Rice, EVP and global chief information officer, who provided an update on the firm’s digital transformation progress this week."
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