McDonald’s is among the largest and best known brands in the world (ranked as the 7th most powerful brand globally by Forbes and valued at $37.4bn) and the largest chain of fast food restaurants (~69m customers per day, 36,000 restaurants, 119 countries, company website).
Once a groundbreaking innovator and major disruptor of the food industry, McDonald’s used to dominate the fast food chain with its innovative approach on standardization, menu, experience and marketing. Lately however, the brand is getting tired: as consumers quickly shift towards alternative, healthier options, the brand has failed to respond.
Following the example of various competitors who have been heavily investing in digital, like Starbucks and Subway, and, consequently have increased their client base, McDonald’s decided to start working hard on its Digital Transformation.
To respond to the trend, McDonald’s has focused on improving the food quality and vocally communicating it. However, given that food quality and, most importantly, perception of it is very hard to change, McDonald’s also wants to re-invent the customer experience and move towards the digital age.
And they want to do it fast (“We were late coming to the party, but we will catch up and accelerate.” Don Thompson, Former CEO of McDonald’s) with a strategy is focused on trial and error (“Right now, there’s a high tolerance for risk. The company is seeking progress over perfection […] We can fail fast and spot the successes and scale fast.” Steve Easterbrook, CEO of McDonald’s).
While the competition looks at how pizza chains let their customers order through mobile, McDonald’s is getting its inspiration from start-ups and big tech companies and wants to work with them.
Firstly, McDonald’s redesigned its mobile application and added new, exciting features to attract customers to their stores. For instance, pilot coupons that would only stay valid for a few minutes were included in the app, e.g. new menu items were advertised and discounted.
Additionally, the company used digital innovation across alternative ordering channels (PC, tablet, mobile phone) to increase revenues. Customers can now order online and quickly their favorite meals. The process is simple. First the customer logs on the application; in the background, geolocation technology is used to identify where he or she is, so as to detect any nearby stores and identify the closest pickup. The menu is clear: new and “preferred items” (based on the customer’s previous orders) are most prominent and the customer simply selects. The payment is conducted online and upon confirmation, the customer receives a code (potentially QR) and can then pick up the prepared meal without waiting. Each restaurant will have a standardized set of the required hardware and software by 2020. The company will use the data collected from customers’ orders to create customized promotions.
But McDonald’s strategy of bringing people to the stores doesn’t stop there. The company focused on adapting new, exiting devices and services within the stores. One of these applications is the smart dinner table. Using NFC (near field communication) and scaletrix design technologies, microchips are placed under the store tables converting them into interactive games, which can be activated using a smartphone screen (within the McDonald’s app). Additionally, following the lead of Starbucks, McDonald’s is piloting wireless charging spots as an additional way to attract customers to hop into their restaurants. Also, McDonald’s was among the first firms to adopt alternative payment systems, like Apple Pay, and introduced it across cashier counters (in store, drive-thru).
Evaluation & next steps
The tactics have stabilized the falling traffic in the store chain, where implemented and evne increased traffic in specific locations.
While McDonald’s realized the threats and opportunities of digital rather late, it is now taking strong action to remain competitive. There are further improvements required to ensure operational efficiency and attract more people to the stores that are not mentioned in the company’s plans.
More precisely, McDonald’s needs to further test the new devices and train personnel on their use, to ensure that the pre-order experience is standardized across the chain, across countries. Maintenance and device replacement is also important and the company needs to frontload these requirements to ensure it delivers what it claims.
Additionally, as more and more people start valuing healthy eating, McDonald’s should leverage technology to explain the exact food ingredients and preparation process, given the improvements happening now. This will help shift the customer perception, bring more traffic to the stores and ensure McDonald’s legacy going forward
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