Same-store sales at McDonald's are up 6.2 percent (5.4 percent in the U.S.) in the first quarter of 2016 and, in an earnings call with investors Friday, company executives attributed the spike to a restructuring program that placed less emphasis on millennial customers and more on franchises.
The success of the burger behemoth's all-day breakfast menu and value deals — like its two-for-$5 menu — also helped spur growth. The company recently announced it would be replacing the "McPick 2 for $2" value meal with a two-for-$5 option, a move that made the chain's value meals considerably pricier than those of its competitors. Chief executive officer Steve Easterbrook said customers for either deal are likely looking for different things. "[With] two-for-$2, you are typically addressing the most value-conscious customers, the people who are looking for a deal," he said, adding that a low-cost value meal was particularly important during certain times of year, like after the Christmas holiday when "a dollar here, a dollar there, matters for customers." The two-for-$5 customers, he said, were more interested in "constructing a meal" around that deal. The value deal model appears to be a profitable one for franchisees, "a good number of whom" chose to redirect marketing efforts toward the two-for-$5 campaign instead of the company's popular Monopoly promotion.
Easterbrook also said the brand continues to look at ways to innovate to "reflect customers' changing demands." Part of that innovation is the roll out of table service and self-ordering, Create Your Taste kiosks, which Easterbrook called "progress." It's worth noting that replacing human workers with digital kiosks could also help the company offset higher minimum wages in some states, but Easterbrook did not touch on that in the call. He did note, however, that the company's decision to close underperforming restaurants has "directly led" to financial improvement.
Of course, the success of the turnaround plan hinges largely on improving the customer experience and operations at each of the fast food giant's stores. One of the core frustrations among customers, noted Easterbrook, has been the accuracy of the drive-thru, which the company has worked to streamline with simplified menu boards and new-crew training procedures. The brand has even worked to perfect the font size on receipts, "so it's easy to spot the special requests and special orders." The CEO also noted McDonald's "investment in quality" (specifically when it comes to things like toasting sandwich buns), which he said "is being recognized by customers."
Easterbrook emphasized the company's growth into new regions around the globe, noting that it plans to add 1,500 restaurants across China, Hong Kong, and Korea over the next five years. McDonald's recently entered its 128th market — in Kazakhstan, where Easterbrook said it sold more than 2,000 Big Macs on its first day alone.