Corporate Profiles - 2024 - 94

COMPANY overview
McDonald's Corp.
M
cDonald's Corp. is exploring valuedriven
strategies and core menu item
innovations to recapture some of its lost
dollar share from budget-conscious consumers.
Sales for the company's US and global divisions
were down 0.7% and 1.1%, respectively, in the
second fiscal quarter ended June 30, compared
with a 10% increase in US sales and a 12%
increase in international sales during the same
period last year.
Chris Kempczinski, chief executive officer of
the Chicago-based company, attributed the decline
to a slowdown in the quick-service restaurant
sector across its markets, lagging economic
Value platforms, core menu innovation
keys to driving growth
McDonald's is emphasizing its D123 platform,
featuring select menu items at $1, $2 and $3
price points, which is positioned to go after that
segment, said
Kempczinski. Additionally,
the
company launched a $5 Meal Deal in late June
as part of an " accelerating the arches " growth
and innovation strategy.
In May, McDonald's also began discussions
with store owners and operators about establishing
a national value platform to improve
restaurant traffic.
" I think the issue that we have in the US is
Chief executive officer -
Chris Kempczinski
recovery in China, weakness in France, the war
in the Middle East and decreased traffic resulting
from higher prices.
" Beginning last year, we warned of a more
discriminating consumer,
particularly among
lower-income households, " he said on a July
29 earnings call. " As this year progressed, those
pressures have deepened and broadened. "
Kempczinski identified consumers earning
approximately $45,000 or less as a key group
the company is targeting. McDonald's saw those
lower-income consumers shifting away from the
restaurant chain amid higher menu prices in
favor of eating at home, though the company
continued to gain share among middle- and
high-income consumers.
94 \ October 2024
in an environment where everybody is out there
with a value message; there's an opportunity for
us to drive better awareness of what our value
platform is, " Kempczinski said. " We're doing it in
50 different ways with local value. What we don't
have in the US right now is a national value platform
at the same time that our competitors are
out there with a national value platform. "
The company is further exploring innovation
opportunities across its core beef, chicken
and coffee menu items in order to drive sales.
The effort includes the " best burger " initiative,
which focuses on changes to the cooking and
preparation methods of McDonald's beef products
to create " significant improvements in taste
and quality, " said Ian F. Borden, executive vice
president and global chief financial officer, in a
March 13 presentation at the UBS Global Consumer
and Retail Conference. McDonald's has
rolled out the initiative to roughly 70 markets,
with plans to extend the program to the rest of
McDonald's system by the end of 2026.
Borden said the company remains under-indexed
in its share of the chicken category, which
is much larger and growing faster than beef, and
is in the process of scaling its McCrispy and McSpicy
platforms. For coffee, Borden emphasized
the need to deliver consistent taste and quality to
capture its share of the market.
" We have 100 different coffee machines
across our business today, " he said. " How can
you possibly deliver a consistent experience if
you aren't even putting the product together in
a consistent way? " CP
2021
$7,545
Source: McDonald's Corp.
McDonald's Corp. net income
in millions
2023
$8,469
2022
$6,177
McDonald's Corp. net
revenues
in millions
2023
$25,494
2022
$23,183
2021
$23,223
Source: McDonald's Corp.
McDonald's Corp.
share price
Source: New York Stock Exchange
$230
$250
$270
$290
$310
LOW =
Oct. 12, 2023
= $240.37
Sept. Nov.
2023
MCDONALD'S CORP.
Jan.
2024
HIGH =
Jan. 19, 2024
= $295.18
Sept. 4, 2024
= $288.03
March May
July
Sept.
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Corporate Profiles - 2024

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