Warm up
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- What industry do you work in and what is your role?
- What are your responses in your role / position?
- Can you describe to the function of your workplace / company?
- How many departments, how many offices. National or International?
- What are the minimum requirements for employment ie Education or Experience?
- How many opportunities are there to ‘move up the ladder’?
- What is the process for changing job roles ie Interview? Test?
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- Current projects? Deadlines? Opportunities?
- Anything of interest happening?
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1. McDonald’s reported a 3.7% comparable sales increase in the U.S. during the second quarter, while its global same-store sales jumped by nearly 10%. These positive results come despite inflationary pressures not seen in 40 years; pressures that have kept a huge chunk of consumers (about 80%) from eating out as much as they’d like to.
2. Notably, McDonald’s Q2 sales growth was driven completely by higher menu prices. During this morning’s earnings call, outgoing CFO Kevin Ozan said menu prices are up “high-single digits” and are expected to remain in that range for the full year. In other words, consumers continue to perceive McDonald’s as a value leader, which bodes well in challenging times like these.
3. Executives did note they are seeing some trade down activity, specifically from lower income consumers ordering more value offerings and fewer combo meals. But, unlike some of its peers, the company is taking smaller, more frequent pricing increases to ensure its value perception continues.
Do you think Macdonalds is good value for money? Discuss
4. “(The approach) gives us the flexibility to be able to see how consumers are reacting and then adjust if or when necessary,” Ozan said. Kempczniski added that McDonald’s continues to do well on metrics such as “good value for the money.” As such, the company is likely benefiting from external trade down activity, including consumers choosing the brand over cooking at home. Grocery inflation has outpaced restaurant inflation by nearly three percentage points.
5. “Food-at-home is increasing significantly faster than food-away-from-home. I don’t know what the impact from that is, but there is certainly some benefit we’re seeing from that,” he said. “In almost every market, we are leading among our peers for value per money standpoint. Even though we’re pushing through pricing, the consumer is tolerating it well and we’re still doing very well from a value score standpoint.”
6. Consumers’ value perception of the brand is only likely to increase as the company ramps up its digital business, including through its fledgling MyMcDonald’s Rewards program, taken nationally just last year. In Q2, digital sales in the company’s top six markets exceeded $6 billion, or about one-third of total systemwide sales. A higher number of digital customers means more personalization opportunities for the brand, including personalized value.
Do you use any rewards programs? Are they worth it?
7. “You have to think about value in a targeted way. As we get more digital, there are different products with different elasticities in different geographies. I get excited about the ability for us to be much more targeted in how we deliver that value,” Kempczinski said. “What we’re looking at doing is exactly which products do you need to offer value, to what degree and through what vehicle–an offer, a menu price adjustment or promotion?”
8. He added the concept of “value” is no longer a one-size-fits-all equation because of the opportunity digital provides in learning more about how customers access the brand. “To get a sense of what the opportunity is (with digital), if you look at Germany, France, the UK, China, digital is over half of sales in those markets. In China, it’s over 80% of sales. That’s compared to the U.S., where it’s maybe a quarter of the sales. So, there is a big opportunity for us to increase digital as a percentage of sales,” Kempczinski said.
9. “What happens when you do that is the percentage of identified customers goes up dramatically. That opens up a whole range of things, from service opportunities, pricing opportunities, etc. Digital for us, we’re starting to see the benefits, we just need to go harder and faster.”
