McDonald’s ‘Billions Served’ Takes on New Meaning
Q1’21 was another impressive quarter for McDonald’s driven in part by the brand’s digital sales.
In Q1, global comp sales for the quarter were up 7.5%. In the U.S. comp sales were up 13.6% for Q1. To date, global comp sales and revenues have already surpassed Q1 2019 levels. Not surprisingly, “We expect McDonald's to deliver strong global comp sales and revenue growth against 2019 levels for the full year, reflecting the strength of our business and the pent-up customer demand,” said Chris Kempczinski - President & Chief Executive Officer, in an earnings call with analysts.
A full earnings release is available here.
The global QSR’s three growth pillars, MC&D: Maximized marketing, Committing to the core items, and Doubling down on the 3Ds – digital, delivery and drive-thru, “continue to serve as both a guide and an engine for our path forward,” Kempczinski added.
“We're creating a faster easier better customer experience. However, our customers want to interact with us, whether at the counter, through drive-thru window or on the app, dining in the restaurant or having that meal delivered to them, we will offer experiences they love and that we believe will keep them coming back,” Kempczinski said.
Delivery
About 75%, or 30,000 locations, of McDonald’s offer delivery. That’s up from 3,000 locations four years ago. McDonalds’ is testing self-delivery models in select markets and identifying ways to improve restaurant operations for deliveries, he added.
Drive-Thru
With about 25,000 locations with drive-thrus worldwide, drive-thrus have been a “competitive advantage… And since the pandemic began, we've leaned into this competitive advantage by continuing to improve drive-thru service times by putting more emphasis on operations and reducing menu complexity,” said Kempczinski.
It was the right decision that paid off. Early in the pandemic, the U.S. business removed dozens of menu items. Drive-thru times got faster, margins grew and customer satisfaction improved. “Put simply, our restaurants became easier to run and more profitable,” said Joe Erlinger - President of McDonald's USA, in the earnings call with analysts.
McDonald’s is among the restaurants increasingly leaning in to off-prem, including drive-thru and curbside. “With COVID as the catalyst for consumer behavior shift, we experienced an absolute surge in off-premise dining,” explained Erlinger. “We drove our digital sales mix and app usage. In the first quarter, we had nearly $1.5 billion in digital sales, which includes app, kiosk and delivery. And we now have over 20 million active app users with loyalty yet to come,” added Erlinger.
Digital
Digital is an “important channel to improve speed and convenience, provide customers with more personalization and offer even better value,” said Kempczinski. Worldwide there are 40 million active app users in the top 6 markets. “Our goal is to make sure that no matter how customers interact with us, they have a seamless and consistently enjoyable experience,” he added.
LOYALTY TEST
McDonald’s is currently piloting a loyalty program, My McDonald’s, in the U.S., and it is “one key lever in reaching our digital ambition” said Kempczinski.
“…What inspires me the most about our digital transformation is that we constantly have the opportunity and ability to become even more relevant in our customers' everyday routines. The power of our growth pillars come to life not in isolation but in combination.”
Case in point: the success of McDonalds’ Famous Orders program. The Travis Scott meal – and revealing what the musician’s go-to McDonald’s order and enabling customers to order the same with ease has been a whirlwind success.
“Nothing had a greater impact on our digital business, than the introduction of this program last year,” stated Erlinger. “We've retained many of the digital customers acquired during those Famous Order promotions and the US business is very excited about the upcoming BTS meal, (The South Korean boy band) which continues to maximize our digital investments without adding any restaurant complexity. And with that foundation, we are well positioned heading into our loyalty program launch later this summer.”
The deets on the BTS Meal drop globally on May 26.