Affordability bites for McDonald’s, new value propositions offer an answer

McDonald’s must be on the side of the consumer and “laser-focused on affordability”, according to CEO Chris Kempczinski.

Context 

• He told an earnings call that consumers around the world faced elevated prices across their everyday spending and were being careful – which in turn was putting pressure on the QSR industry.
• “In Q1, industry traffic was flat to declining in the US, Australia, Canada, Germany, Japan, and the UK. And across almost all major markets industry traffic is slowing,” he reported.  

What it means 

• “We know our customers are looking for reliable everyday value now more than ever,” Kempczinski said. 
• “Staying on the side of the consumer and executing against our plan is our model for driving long-term growth regardless of the broader landscape,” he added. “As consumer pressures have mounted we have reacted with agility to proactively meet evolving customer needs.”
• That has included the launch of everyday value menus across many international markets. “Featuring value bundles at various price points, these new offerings provide smaller, more affordable meals to our customers,” he explained.
• McDonald’s will also look to get existing customers to visit more often, leveraging its digital capabilities and loyalty data.

Getting the message across 

• “We always have to be finding ways to be driving consumer interest around great marketing plans,” said Kempczinski. “And if we’re doing great marketing, you can grow the business just with your core menu.”
• “When we shift marketing investment from traditional mass media like television, print and billboard ads, to collective investment in modern and digital capabilities to personalise the experience, we drive profitability,” he added. 
• In the US, he sees a need to move away from local value messaging to develop “a strong national value proposition that we can then use our media scale to drive high consumer awareness on it”.

Key quote

“We must be laser-focused on affordability, which means good entry-level price points available every day. In the markets where we’re doing this well, the business is outperforming” – Chris Kempczinski, CEO at McDonald’s.

Sourced from Seeking Alpha