McDonald’s bets its future on technology as it dramatically overhauls strategy

McDonald’s Olympic Park, Stratford

McDonald’s has mapped out a bold new global plan that will reshape the way customers place orders and put technology at the heart of the delivery process.  

The new strategy, which is designed to unlock profit growth and regain customers lost to other QSR competitors, sets the tone for how the 36,000-unit chain thinks its business will develop in the next three years.

The growth plan focuses on accelerating digital capabilities and enhancing its use of technology in restaurants, in the drive-thru, and on the go.

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Inside the restaurants, McDonald’s is proposing to bring greater control, convenience and personalisation to its customers through the use of kiosks to place orders, staffed with guest experience leaders to assist in the process.

Customers can place their order and skip the front counter entirely, with their food brought right to their table.

Additionally, customers will be able to place orders directly on the mobile app for pickup or have a kiosk recognize their app profile, which holds customised favourites and preferred payment methods.

“The result is a more stress-free, personalised experience, enhanced by technology and world-class hospitality that puts customers in control,” CEO Steve Easterbrook said.

The same enhanced experience will be available outside the restaurant too.

McDonald’s revolutionised convenience in the drive-thru sector in the 1970s and it claims the new strategy will transform the business once again.

By enabling mobile order and pay through the McDonald’s app, customers can personalise their order while skipping the drive-thru line and instead choosing curbside delivery.

If customers choose the drive-thru, they will simply read the already placed order code to the crew and their mobile order will be ready for pickup at the window. These more efficient enhancements are designed to speed up the kitchen process and allow more customers to pass through its drive-thrus.

McDonald's France

Mobile order and pay will be launched in 20,000 restaurants in some of its largest markets by the end of 2017. It said this will include the US, but did not go as far to say whether it extends to the UK. However, the UK is one of the chain’s top five markets, along with France, Germany and Canada.

Easterbrook also revealed McDonald’s strategy for dealing with the ‘disruptive’ force of delivery.

He said there was an “exceptional opportunity” for growth due to advancements in the way customers order, pay, track and receive food, and the explosive growth in third-party delivery companies.

The company thinks its footprint makes it “uniquely positioned” to become the global leader in delivery, noting that nearly 75% of the population in its top five markets lives within three miles of a McDonald’s.

McDonald’s is already one of the largest providers of delivered food in the world, with annual Systemwide delivery sales of nearly $1 billion (£814m) across various markets including China, South Korea and Singapore. China has tripled its delivery business since its launch in 2008. In 2016 alone, China’s delivery business grew 30%.

“No other food company in the world has this reach and ability to be this convenient to so many customers through delivery. Currently, McDonald’s is experimenting with different delivery models including partnering with third parties for ordering and fulfillment throughout the world,” said Easterbrook.

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McDonald’s admitted to investors this week that it has lost customers to QSR competitors and as customers’ expectations increased it “simply didn’t keep pace with them”. It thinks the improvements will win those customers back and aims to become more present in under-developed categories and occasions, including competing more aggressively in coffee and snack offerings, to convert casual customers into more regular visitors.

Easterbrook revealed that McDonald’s would now ramp up its ‘Experience of the Future’ strategy in the US, with the emphasis on providing a more convenient, more personalised and more enjoyable visit for customers.

The strategy leverages the convenience and technology of kiosk ordering and table service, increasing functionality of the mobile app to enhance the enjoyment of its food and the hospitality of the McDonald’s crew, all in a more modern, more exciting restaurant environment.

In restaurants around the world with Experience of the Future, it has realised mid-single-digit sales lifts above the market.

In the near-term, McDonald’s is redirecting a portion of capital saved from refranchising to modernising the US estate.

The company plans to reimage about 650 restaurants in 2017. When combined with previously modernised restaurants which will be updated with Experience of the Future elements this year, the US will have approximately 2,500 Experience of the Future restaurants by the end of 2017.

Because this investment represents one of the greatest opportunities to build on business momentum and grow guest counts, McDonald’s intends to have most of the traditional free-standing US restaurants modernised to reflect the Experience of the Future by the end of 2020.

“We have fundamentally changed the trajectory of our business over the past two years. Now, we are fit for purpose, ready to build on our momentum and transition to focus our efforts on profitable, long-term growth,” concluded Easterbrook.

Tags : deliveryfast foodMcDonaldsQSRsstrategytechnology
Andrew Seymour

The author Andrew Seymour

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