Spurred by the continued popularity of all-day breakfast and antibiotic-free chicken nuggets, McDonald’s has beaten earnings expectations in the third quarter of fiscal year 2016.
In an earnings call with analysts Friday, McDonald’s chief executive officer Steve Easterbrook touted the restaurant’s profitability, but said the fast food giant was continuing to evolve the experience "to provide more high-quality, affordable food and beverage options and convenient solutions for customers on the go."
So what does that mean, exactly? Here are three things we learned from McDonald’s executives Friday.
McDonald’s will continue to become more tech-focused.
According to Easterbrook, more than 90 percent of U.S. McDonald’s stores are currently using digital menu boards. That number is likely to grow in the near future, and those menu boards are likely to get even more high-tech. That’s because each digital menu board contains what Easterbrook calls "a robust content management system that we haven't even begun tapping into."
In the future, those menu boards will adjust based on the time of day or weather conditions. Easterbrook foresees a future in which "ice cream and McFlurries will be highlighted on a hot summer day," and customers visiting McDonald’s during the winter would be met with a menu highlighting hot McCafe beverages.
Easterbrook added that the chain will continue rolling out more restaurants of the future, though he didn’t provide a timeline or additional details. Around 50 percent of U.S. stores have been modernized so far, an investment that’s paid off. "Literally as soon [as a store is revamped], it sees a sales lift," said Easterbrook.
Higher quality leads to higher sales.
In August, the fast food behemoth announced it had nixed artificial preservatives from some of its menu items, including scrambled eggs, Chicken McNuggets, and breakfast sausage. It was a move that paid off in a big way. According to Easterbrook, McNuggets sales are up 10 percent since the removal of artificial preservatives.
The chain will continue rolling out "higher-quality menu items," such as a line of signature sandwiches that will eventually be available at all of the company's McDonald’s of the Future stores. The chain has been testing a selection of signature sandwiches and burgers at restaurants throughout the country over the past year or so.
In some markets, Signature sandwiches allow guests to select a protein (grilled or fried chicken or a burger patty) and a topping style: apple bacon dijon; sweet barbecue bacon; or pico guacamole. In California, it recently added a Signature Sriracha sandwich to the mix.
Easterbrook said the company will continue offering customizable options, specifically referencing some that have been rolled out in Australian stores: "We’re taking what we’ve learned there and hoping to apply it to local stores — customizable options that we can deliver through both the drive-thru and in store."
New menu items don’t mean the company will get rid of its bread and butter, though. According to Easterbrook, all-day breakfast is "here to stay."
A lot of people are choosing to eat at home rather than at McDonald’s.
Sales may have beaten expectations, but they still slid in the U.S., partly because some people would rather eat at home than at the Golden Arches. Easterbrook blamed that on inflation, declaring the gap between the cost of eating at home and the cost of eating out is wider than ever before.
Federal data illustrates average prices for food eaten at home in January actually fell 0.5 percent, year over year. During that same time period, restaurant prices rose an average of 2.7 percent. Of course, the average check at McDonald’s is lower than most restaurants, but it's likely inflation will continue to plague the company in coming months.