Five lessons food-to-go businesses can learn from McDonald’s new growth strategy

Nicola Knight
Senior Analyst - Food-To -Go
@IGDShopperNews

Date : 17 November 2020

Last week McDonald's announced new strategic priorities which aim to balance the short term needs of customers whose daily lives are restricted by the pandemic, with the long term implications prolonged restrictions will have on future behaviour.

The announcement of the ‘Accelerating the Arches’ strategy coincided with the release of its better-than-forecast Q3 2020 results showing like-for-like (LfL) sales up 4.6% in the US and down 2.2% globally, with systemwide sales flat vs 2019.

Whilst other food-to-go operators have released details of new formats adapted to changes caused by the pandemic, McDonald's is the first major brand to outline how it plans to grow during and post-COVID.

What’s the strategy?

The growth pillars in McDonald's new strategy (note the handy acronym) are:

  • Maximise marketing – investing in culturally relevant communications of corporate values at a community level
  • Commit to the core – building on customers' desire for familiarity, ensuring key lines are the best they can be
  • Double down on the 3D’s – making digital, delivery and drive thru experiences easier

The new plans build on the elements that have helped McDonald's bounce back quickly after stores where closed in many markets at the start of the pandemic.

So, what can other food-to-go operators, retailers and manufacturers learn from McDonald's approach?

1.    Understand why your customers are “lovin’it”

Consumers continue to prioritize brand trust, great taste and value as top reasons why they choose McDonald’s”.  With this statement McDonald's shows that even though customer expectations are constantly shifting it clearly understands what people love about its brand. At a time when physical relationships (with people and brands) are hard to maintain, McDonald's is upping its focus on marketing based around these key messages to build a sense of community. 

Trust is also a key word here.  Knowing why customers love your brand, reinforcing these points in communications and reassuring them that they can trust you when so much is so uncertain are more important than ever.  In the UK, McDonald’s has done a great job of making this personal, with regular email updates to customers from UK and Ireland Chief Executive Paul Pomroy.

2.    Put community at the heart of your purpose

One of the most positive changes the pandemic has brought about is how communities have come together to support each other through the crisis.  For example, in food-to-go, we’ve seen businesses around the world give millions of free meals to key workers and those in need.

As part of its new strategy, McDonald's has renewed its purpose, which is to feed and foster the communities the fast-food chain and its franchisees serve around the world and this will come to life in a new campaign called ‘Serving Here’..  The company will focusing on four areas that matter most to communities: responsibly sourcing quality ingredients, driving climate action to protect the planet, connecting with communities in times of need and increasing focus on equity by providing opportunity for restaurant staffers.

McDonald's increased focus on community values is something we’re seeing in other areas too. UK convenience retailer Co-op recently announced that it wants to form long term relationships with like-minded businesses who share similar values around inclusion, diversity and belonging, and it will promote these values through product and in stores.

By making community central to your purpose not only will you be tapping into the hearts of customers but you will also be paving the way for closer relationships with leading businesses.

3.    Build a strong core

McDonald's strategy will use the core products on the menu (which make up 70% of sales) as a foundation for growth.  It will focus on improving its burger and chicken categories to target the expected increase in lunch and dinner occasions, whilst building coffee awareness and consistency to boost mornings.

Exciting new NPD may give you something new to shout about and inspire trial but making sure your customers’ favourite products are the best they can be is one of the surest ways to keep loyal followers coming back. 

4.    Integrate and streamline digital and physical

McDonald's vision is to be “the leading omni-channel restaurant in all our markets”. This demonstrates how fundamental technology is now to its growth plans.  

Mobile ordering is said to be skyrocketing, with digital sales exceeding $10 billion this year across its top six markets.  To build on this, McDonalds will trial a new loyalty programme in the US through "MyMcDonald's” which will present customers with tailored offers and easier ordering regardless of delivery channels.  It promises to offer enhanced speed, rewards and deals and a seamless McDonald’s experience whichever way customers order.

The accelerated growth of omnichannel food-to-go is set be one of the legacies of COVID-19.  Many businesses have made huge advances in this area but in many cases there is still work to do on joining up the customer journey and streamlining internal processes.

5.    Have a flexible plan that works for today and tomorrow

‘Flex for success’ is a trend that we identified at the beginning of the year in our Food-To-Go Trends 2020 report.  The unpredictability of the pandemic has accelerated the need to develop new channels and service models that can be flexed depending on what restrictions are in place.

As outlined in our UK food-to-go forecasts, QSRs are more resilient to pandemic restrictions than other food-to-go sectors due to their lead in what McDonald’s calls the 3D’s (digital, delivery, drive thru). If dine-in is closed they have other ways to serve customers.

Having a plan with flexible elements that can be dialled up or pulled back depending on the situation in different regions, countries or even states is more essential than ever.  Food-to-go operators and retailers need to develop a variety of ways to reach customers now whilst focussing investment on areas where long term shifts, such as increased working from home and higher digital usage, will have the most impact.

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