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MCD Customization Strategy
- 1. Jacqueline Trouveroy Tim Spenser Jabari Zhang Sunny Tran Troy Kim McDonald’s
- 2. Overview ● Last year’s operating profit in the U.S.: $3.52 billion ● With our strategy: 4.14 billion
- 3. Past “Plan to Win” •Jim Skinner’s “Plan to Win” –Attract more customers –Evolve the menu –Increase brand loyalty
- 4. Target Issues ● Who: Brand image with Millennials ● What: Standardized choices ● Where: Fast food market-stagnant growth ● How Much: Low price-signifies to customers lower quality ● Promotion: Not reaching target market
- 5. Strategy Moving towards Fast Casual Market from Fast Food Market by offering flexible pricing and product differentiation *Implementing customization to drive-thru *New products are customizable, not traditional ones *Ongoing customization test
- 6. Our New “Plan to Win” ● Who: Tapping into untouched market for McDonalds- Millennials ● What: Customizable option and remove unpopular items from the menu ● Where: Towards the Fast Casual Market ● How Much: Flexible pricing ● Promotion: Social Media “Create Your Taste”
- 7. Industry Trends ● Trend from fast food to fast casual ○ WSJ reported that the fast food chain declined by 13% in consumption for people between the ages of 19-21 since 2011 ○ According to the Washington Post-fast casual market has grown by 550% since 1999 ● Customization –Creating your own meals •Chipotle •Chopt Salad •5 Guys
- 8. Industry Trends Fast Food-customers pay for their food before they eat it, lower prices, drive thru Fast Casual-food made in front of you, higher prices
- 9. Competition Fast Food Market –Burger King –Taco Bell –Wendy’s Fast Casual Market ➢Panera ➢Five Guys ➢Chipotle ➢Smash Burger
- 10. Perceptual Map
- 13. Customization “Have it your way” Theme - Following theme of Chipotle - Enjoyable experience for the customers
- 14. Counter Layout
- 15. Choose Your Item Burger Wraps
- 16. Choose Your Bread * Wheat Bun Regular Bun * Lettuce Wrap Regular wrap
- 17. Choose Your Meat Burger Menu: Wrap Menu:Both:
- 18. Choose Your Cheese * Blue Cheese American Cheese Cheddar Shredded Cheddar
- 20. Choose Your Sauce BBQ TabascoMayonnaise Ketchup MustardRanch Steak Sauce Hot Wing SauceHot Chilli Big Mac Sauce
- 21. New Menu Items - Blue Cheese: ($1.7/oz) - Wheat Buns: ($0.05/bun) - Lettuce Wraps:
- 22. Our Suppliers ● Golden State (Sauces): Sauces ● Lopez Foods (Beef): Beef patties ● Keystone Foods (McNuggets) : Chicken ● 100 Circle Farms (Potatoes): Fries ● Fresh Start Bakeries’ (Bread): Buns
- 23. Customizable Use of Products Tabasco Sauce Bacon Shredded Cheddar Grilled Chicken
- 24. ● Big Mac is popular ○ Sell 156,900 in U.S. per day ● Customization creates choices ○ Maintain fast service ● Fast Casual Industry is about customization
- 25. What We Are Eliminating ● Salads ● Quarter pounders ● Yogurt parfaits
- 26. Launch Plan 10 states 15 states 25 states
- 27. Phase 1
- 28. Phase 2
- 29. Phase 3
- 30. Millennials: Who are they? ● Age: 18-38 ● 26% of total US population ● 12% of all consumer spending (80 M in U.S.) ● Disposable income increasing while majority are still college graduates ○ Student loans/debt Younger Portion suffering from student loans and debts Older Portion benefiting from disposable income
- 31. Millennials: What do they value? ● Customization ● Social Media ○ 81% on Facebook ○ Spend 1.8 hours a day on social media ● Customer responsibility ● Millennials like innovation ○ Create new combinations
- 32. Would you prefer to buy a premade product or build it yourself at McDonald's? Survey Results
- 33. Millennials: Perception of MCD ● Unhealthy, 90% on survey ● Cheap ● Too simple, boring, generic
- 35. Promotion through Social Media Campaign Facebook: 56,387,147 likes 17,452,587 visits “Create Your Taste” A great source for customer feedback with constant comments on posts Showcase new food opportunities to Millennials are massive scale. Instagram: Already with 527k followers, there is a huge fan base on IG. Would show produce in vibrant, colorful, and tasteful way. “Create Your Taste” people send in pictures of their burger and toppings combination Constant Sharing Twitter: 2.79M followers “Create Your Taste”
- 36. Example of Promotion Through Sharing
- 37. Example of Promotion Through Official Account
- 38. McDonald’s Stock Price (Past 5 Years) Source: Google Finance
- 39. Historical Analysis and Future plan ● Our goal is to increase operating profit in US by 10% (around $600 million) in 5 years ● Historical finance: US operating profit-past 5 years ● Future finance: How it will be changed by 2019
- 40. McDonalds Operating Income Source: Depiction of data drawn from Mcdonald’s Annual reports More details on exhibit 1
- 41. 2014 Net Profit Margin2014 Sales Source: Depiction of data drawn from Yahoo Finance McDonald’s 2014 Sales and Net Profit Margin
- 42. Total Marketing and Construction Cost ● Cost of construction: $48,487,910 ● Cost of marketing: $2,160,000 ● Total cost of construction and marketing cost: $ 51,221,270 *More details on Exhibit 2 and Exhibit 3
- 43. How Will We Create Revenue ● Calculate the number of burgers sold per day in each store ● Assume that 50% customers get customized burgers ( based on our survey) ● Find out average cost of a customized burger at $5.5/per burger ( based on our survey) ● More details on Exhibit 4
- 44. US Projected Operating Income ● U.S operating income without our strategy: 3.88 billion dollars ● U.S operating income with our strategy: 4.14 billion dollars ● More details on Exhibit 5
- 45. Thank you for your attention
Editor's Notes
- Don’t need the w/o
- How will you “convince”
- Who are we reaching with promotion if we aren’t reaching millennials?
- Isn’t it more confusing to have different menus between drive thru and in-store
- Towards but not in?
- http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/02/the-chipotle-effect-why-america-is-obsessed-with-fast-casual-food/ http://www.bizjournals.com/washington/blog/2014/10/fast-food-vs-fast-casual-d-c-tries-to-sort-out-the.html this is where we see a HUGE opportunity to find the sales growth we’re looking for!!
- Mention average pricing in graph (it was said)
- use a table, utilize picutres, show how to take an order from a customer, take them threw the expierence of the ordering process, one spot for customizaiton but still normal resgisters for those who don’t want custoimzation, one cashieer for cusomization one for normal
- Cashier #1- The actual cashier who take actual orders , Cashier #2- One who manages for those who choose customization.
- Don’t need to differentiate. The customers just choose whatever they want What about Crispy chicken??
- What’s new and What’s already there?
- http://www.pastacheese.com/cashel-blue-cheese-sold-by-the-pound.html?gdftrk=gdfV25561_a_7c2043_a_7c7542_a_7cCHS000000028&gclid=Cj0KEQjw6tepBRDLqLnxouaY_pkBEiQAPIOiBi0j6QlUSCwOuJ91yvkT7B_r27FeEzT00E8ub-ltxDkaAr3E8P8HAQ http://www.foodservicedirect.com/product.cfm/p/191603/Rotellas-Wheat-Hamburger-Bun-4-1/4-inch-8-per-pack.htm?gclid=Cj0KEQjw6tepBRDLqLnxouaY_pkBEiQAPIOiBhjEiZ6SjbIsX7nzkCy4FljPVCbmkYkv7W6AsyjmELYaAvog8P8HAQ So in terms of the new menu items we will be implementing at Mcdonalds, we will be bringing in the Blue cheese, Wheat Buns, and Lettuce Wraps, as we know these are very popular items within the culture of millennials today. What about Onions?
- Moving forward, while we are only bringing in 3 products that are new to mcdonalds, we are making all of the topping options at mcdonalds available for your customization, whereas if you went to mcdonalds before, certain toppings were used only for certain meals. We feel as though this change will bring in a ton of millenials as they value custimization and innovation so highly. Why is this slide here?
- Big Mac sells about 156,900 per day over USA http://www.cbsnews.com/news/big-mac-hits-the-big-4-0/ This is confusing.
- in a survey of nearly 27000 people salad qp and YP were the least popular These can be customized...
- Texas has 1,225 and CA has 1,492 http://firstwefeast.com/eat/states-with-the-most-mcdonalds/ Revisit 10 states...
- Find percentage of disposable income and calculate it for median income ranges. Most populous age: 24 year olds
- This generation is not afraid to purchase food online and to look outside of the traditional grocery store to find what they want.
- describe survey questions that applied, and the results, pie chart results
- the restaurant isn’t "unhealthy now", the customer is unhealthy because they have the responsibility, they’re choosing the toppings and how unhealthy or healthy it is (customization)
- Source:http://www.pewsocialtrends.org, Source:http://www.pewsocialtrends.org
- Marketing cost in 5 years for Marketing: Cost of marketing: $2,160,000. Sunny is going to explain in details ( please mention that we r working with 3 agencies each social media, in total 9 agencies) We’re working in total with 9 different agencies, food instagram is huge, you get so many people sharing the photos of them with burgers, people will be seeing it that way and when they see their friends trying out the new stuff they’ll want it as well • the restaurant isn’t "unhealthy now", the customer is unhealthy because they have the responsibility, they’re choosing the toppings and how unhealthy or healthy it is (customization) through the vairous SM channels there will specific messages for each channel for the customer. consistant messaging: all of them will promote the create what you love campain but through different ways. Millennials are on all three platforms.
- We’re lovin’ the create your own campagn, and you should too #Createyourown #Innovation #Myburger google a better picture Does MCD have their own account already?
- cut down title: checked “MCD 5 year stock performance”
- change title: checked
- shorten the title svp: how to do break on graph on excel- checked
- Subway doesn’t have NPM??? Fix the graph - checked
- How much cash does MCD have to spend on this investment? Will they use cash or finance it? What has MCD spent on Marketing in the past?
- 5 out of how many toppings????
- BILLION!!!!!! correct exhibit?