Australia the testing ground for McDonald’s changes

Eli Greenblat
NOVEMBER 25, 2014
THE AUSTRALIAN

TAGGING Australia as one of its most challenging markets, ­McDonald’s, the world’s biggest fast-food chain, will use its 900-strong local store network as a testing ground for a new fitout design that will eventually be launched in its US home market.
Australia will also soon be one of the first countries to have the new McDonald’s mobile app with tools such as promotions, pre-ordering and a loyalty program designed to help re-engage with consumers who have strayed to other fast-food options and drive them back to the golden arches.
McDonald’s faces a slew of earnings challenges around the globe as people turn to healthier options, upstart rival chains or else pull back their spending on eating out because of rising unemployment, stagnant economic growth and concerns about the cost of living.
Young eaters, especially, have been peeling away from McDonald’s, the largest player in the $US1.2 trillion ($1.4 trillion) global casual eating-out market, defecting to other fast-food chains.
The US parent company reported that global sales had fallen 0.5 per cent last month, off the back of a 3.8 per cent sales dive in September. The biggest sales retreat in October was at its Asia- Pacific, Middle East and Africa (APMEA) region, where sales for the period crashed 4.2 per cent.
Last year, sales for APMEA declined 1.9 per cent and like-for-like store traffic fell 3.8 per cent. Australia, China and Japan make up more than 50 per cent of the region’s total revenues.
In Australia, McDonald’s introduced the “Loose Change” menu in 2012 as a strategy to resurrect local stores, but that is starting to wane with thrifty local consumers withdrawing from even that bargain offer to spend less at the chain.
Addressing the Morgan Stanley global consumer and retail conference in New York last week, McDonald’s chief financial officer Peter Benson outed Australia as one of the restaurant giant’s most challenged markets, where changes would need to occur to turn the business around.
“As we focus on our future journey, we are also working to strengthen our business over the short term by taking actions and driving change, especially in our most challenged markets, the US, Germany, Japan and Australia.”
A new thrust to revitalise sales will be “McDonald’s experience of the future”. Australia will be one of the first market to roll out the new-store look.
“It’s a comprehensive concept that integrates consumer-led innovations around our menu, service and digital in order to elevate the entire dining experience and drive greater relevance with our consumers,” Mr Benson told US analysts.
“So we got the Australian market for example,” McDonald’s chief brand officer, Steve Easterbrook, said at the conference, “with a good 900 restaurants who have embraced the vision of the experience of the future and they have a very aggressive rollout program. So we will have 900 restaurants up and running with many of these elements in place by the middle of 2015.”
Mr Easterbrook said a global mobile app would be fully deployed in Australia by the end of the year and launch in the US next year. “The app will offer promotions and payment and be followed by ordering and loyalty program capabilities and we’re truly excited by what lies ahead for us in digital and our overall McDonald’s experience in the ­future,” he said.