Christa Hoyland reports at QSR Web that McDonald’s beverage program is proving a sales driver for the brand, even as consumers remain focused on value, executives told investors on the company’s first quarter earnings call. The company will still promote value worldwide as it continues to push forward with its Plan to Win strategy, including an aggressive re-imaging program.
In the United States, March was the strongest month for the quarter ending March 31, boosted by beverage and value menu purchases, especially at breakfast, as well as increased traffic across all dayparts. McDonald’s breakfast value menu led to a decreased average check, but increased traffic more than made up for the difference, said McDonald’s president and COO Don Thompson.
Thompson also said the company’s beverage program provided a sales lift as Premium Roast Coffee and the McCafé espresso-based drinks continue to grow. Additionally, McDonald’s is gradually rolling out its new frappes and smoothies nationwide. The frappes are in about 90 percent of U.S. stores, and smoothies are expected to launch nationally later this summer.
Jim Skinner, McDonald’s Corp. CEO, said on the call that the company’s new frappes and smoothies are outperforming expectations even without national advertising.
McDonald’s global comparable sales were up 4.2 percent, with the United States up 1.5 percent, Europe up 5.2 percent and Asia/Pacific, Middle East and Africa up 5.7 percent for the quarter.
The U.S. business also drove sales and market share increases during the quarter by providing outstanding value across the entire menu, contributing to the segment’s 12 percent operating income increase.
McDonald’s is continuing its investment in re-imaging worldwide with plans to freshen more than 2,000 locations worldwide this year, including 400 to 500 in the United States. About 1/3 of U.S. stores have gone through re-imaging, and this effort includes interior and exterior renovations. Worldwide, only about 20 percent of stores’ exteriors reflect the brand’s current contemporary look. The company expects to invest $150,000 to $200,000 per restaurant, depending on the scope or the remodel, and owner/operators will contribute the remaining $250,000 to $500,000. (Click here for a slideshow at QSR Web of a McDonald’s re-imaged store.)
Read more at: QSR Web