Archive for the 'McDonald’s Franchise' Category

McDonald’s Brews Bigger Coffee Push

November 1st, 2010


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McDonald’s Franchises use a broad array of marketing tactics, but historically it has left head-to-head-taste-test comparisons to bloggers. That’s why it’s interesting that the chain this week has launched a taste-test TV commercial for its McCafé coffee in Australia.

 The spot opens with a young woman’s assertion that “Blind taste tests have shown that more people prefer McCafé coffee” compared with another leading chain, which isn’t identified, leaving us all free to think “Starbucks,” though the competitor isn’t named. She scurries around Sydney inviting people (including one very-American woman) to sip McCafé and the competing coffee (washing those cups occasionally, we hope), and sure enough, McCafé is preferred. Classic blind-taste-test marketing.

What’s most important here is the reaffirmation of just how important McCafé and coffee drinks have become to the world’s largest burger chain. During last week’s quarterly analyst call, McDonald’s President-COO Don Thompson said coffee’s share of McDonald’s Franchise U.S. sales has grown from 2% in 2004 to more than 6% now. McDonald’s global sales in 2009 were $72.4 billion, of which Chicago researcher Technomic estimates U.S. sales were $30.9 billion.

That means coffee alone was a $1.85 billion business for McDonald’s Franchises in the U.S. It means its U.S. coffee sales were the equal of total 2009 food-and-beverage sales for the No. 6 burger chain, Hardee’s. In some overseas markets, such as Australia (where McCafé began in 1993), McCafé’s share likely is larger than 6% of the total.

McDonald’s is now the single largest seller of coffee in the UK, Thompson says, and the chain has 600 McCafés in Germany. “We see opportunities in many of our other markets  … We do see coffee as a point of leverage and growth for us as we move forward,” he said.

In North America, “we still have an opportunity relative to the broader McCafé coffee,” Thompson told analysts. “I know the U.S. team is going to be marketing those products as well. There’s quite a few things that will be coming up.”

McDonald’s heavily markets its sub-brand in Australia, using the tagline, “There’s more to McCafé.” The menu there is broader, including pastries, cookies, muffins, savory snacks like Spinach & Feta Strudel, brownies and tarts as well as coffee drinks, frappés and smoothies. It’s a big enough menu to spin off on its own, which is what McDonald’s Franxhises are doing in Paris, where standalone burger-less McCafés are being tried.

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Buy A Franchise – Golden Arches Turning Green?

October 22nd, 2010

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  • California McDonald’s turns its Golden Arches green

  • McDonald’s Franchises have shifted focus in the past couple of years to step up its environmentally-friendly efforts.

    For example, sustainable initiatives have been put into place at international and domestic units, and McDonald’s global headquarters in Illinois earned LEED platinum certification in 2009.

    The U.S. Green Building Council’s Leadership in Energy and Environmental Design Platinum seal is one of the most prestigious green building awards, and exists in less than 250 buildings in the country.

    Not a company to rest on its laurels, McDonald’s Franchises continue to adapt green friendly practices, most recently opening its fourth LEED gold certified restaurant in Riverside, Calif. — its first green restaurant in the west.

    To recognize the efforts, the restaurant’s iconic Golden Arches have been turned green.

    Other LEED certified McDonald’s units are located in Cary, N.C., Savannah, Ga. and Chicago.

    The Riverside McDonald’s Franchise, which has been in existence for 44 years, is owned and operated by Tom and Candace Spiel, and reopened Thursday after an extensive remodel featuring a list of green features.

    They include:

    • A light colored hardscape to reduce heat emissions
    • Native drought tolerant plants to reduce water consumption
    • Low flow plumbing fixtures to reduce water usage
    • Almost 300 photovoltaic panels to generate a percentage of solar energy power
    • Recycled denim insulation inside the building

    “We were inspired to build a McDonald’s Franchise restaurant that highlights the green focus of Riverside: California’s first Emerald City,” said Candace Spiel, McDonald’s owner/operator. “We are so proud of this restaurant and its possibilities to encourage and educate our customers and community on the importance of environmental sustainability.”

    Education will be promoted through the restaurant’s new touch screen display that includes information about the building’s green features and sustainable practices that can be done at home.

    McDonald’s global headquarters, built in 1988, includes an open office environment, space-saving underground parking, native landscaping, rainwater collection, low mercury interior lighting, bike racks, recycling and waste programs, and more.

    The company’s recycling program has yielded 130 tons of recycled materials annually, including 31 tons of scrap metal, 128 tons of paper, and 80 percent of used cooking oil has been converted into biodiesel fuel.

    McDonald’s Corp. released its latest corporate responsibility report in January, outlining its latest global practices in the areas of sustainability and environmental responsibility.

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    Buy A Franchise – McDonald’s Social Responsibility a Privelage

    October 10th, 2010

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    McDonald’s: “Social responsibility a privilege”.
    Chief executive Jim Skinner says charities like the Ronald McDonald House are ‘the right thing to do’.

    McDonald’s Franchises  may be known for its “billions and billions” served, but chief executive Jim Skinner gathered with Ronald McDonald and several hundred people in Saint Louis to celebrate a significant, if slightly smaller, milestone — the opening of the 300th Ronald McDonald House.

    Skinner was joined at the ribbon-cutting ceremony at St. John’s Mercy Medical Center by several families of sick children.

    Every night the Ronald McDonald Houses around the world accommodate more than 25,000 family members of children who must undergo treatment at affiliated hospitals. During his opening remarks, Skinner said McDonald’s Franchises have saved families millions of dollars in hotel room charges by giving them rooms to stay near health-care facilities when they must travel to seek care for their children.

    Ronald McDonald House Charities officials said families stay an average of 10 days at RMHC facilities during treatments.

    Skinner and Marty Coyne, chief executive of RMHC, noted that the charity stands in contrast to negative publicity McDonald’s receives as the prime target for activists assailing quick-service operators for alleged unscrupulous marketing to children. However, they view the company’s corporate social responsibility efforts not as an obligation but as a privilege, and they said RMHC continues its mission because “it’s the right thing to do.”

    Skinner spoke with Nation’s Restaurant News about the importance of the brand’s image and the consumer experience. He also provided an update on how the company’s signature initiatives helped McDonald’s Franchises weather the recession.

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    Popularity: 7% [?]

    Buy A Franchise – McDonald’s Thrives During Recession

    September 28th, 2010

    The recession, now officially over, and down in history books the longest since the Great Depression, was not kind to the business world. Once-proud General Motors succumbed to government takeover. Disgraced financial giant AIG  needed taxpayer bailouts to survive. Countless smaller, uncelebrated businesses closed their doors completely.

     An exception to all of this economic despair has been fast food chain McDonald’s. While rivals Burger King  and Yum! Brands  struggled during the recession, McDonald’s has not only stayed afloat since 2008: it has grown.

     In August, McDonald’s reported that sales at stores open at least 13 months rose 4.6%. Burger King, meanwhile, announced on September 2 that it has agreed to sell itself to investment firm 3G Capital in order to “gain breathing room to fix its business,” according to Reuters. At that time, Burger King shares were down more than 31% since the end of 2008 – while McDonald’s shares rose nearly 18% during the same period.

    Here’s how McDonald’s did what so many other businesses coundn’t during the recession: thrive.

    Recession-Friendly Pricing

    As early as November 2008, Forbes recognized McDonald’s low pricing strategy as a pillar of its recession-era success. At that time, Burger King’s stock had fallen 24.6% over the prior year, while Yum! Brands had plummeted 28.6% during the same period. Ruby Tuesday  went into a free fall, with its stock falling 88.3% at that time. McDonald’s, meanwhile, dropped only 3.4% during this time frame. The reason, Forbes maintains, was its “recession-friendly Dollar Menu.”

    In addition to that, McDonald’s occupies in the food service industry roughly the position that Wal-Mart fills in retail: the lowest-cost producer. When recession strikes, cost becomes paramount.

    New Products For Different Markets

     CNN, while acknowledging the cost issue, says that there is more to why McDonald’s has thrived. Referring to the company’s “liquid profits,” CNN finds that McDonald’s has “given more kinds of people more reasons to head to its stores throughout the day, buying an ever-wider range of products.” Throughout its history, McDonald’s has been a place for young people to quickly get their hands on cheap, greasy food and leave as fast possible.

    Today, McDonald’s has grown far beyond these needs. For one thing, the fast food chain now sells premium coffee which, Consumer Reports says, beats Starbucks for taste and quality. A new line of now-popular frappes and fruit smoothies was released. Most McDonald’s locations also offer free wifi Internet access, with the goal to not only bring in more customers through the doors, but once in, get them to stay longer (and consume more) as well. 

    Reduced Advertising Costs

    McDonald’s has also shrewdly taken advantage of lower TV advertising rates to reinforce its unique selling proposition to customers. As CNN explained in August, rates for local television advertising are down across the board due to lower promotional spending across the business-to-consumer world.McDonalds, whose same-store sales rose 7% internationally in July versus a year ago (and 10.1% in “non-American, non-European parts of the world) has seized the opportunity to mount an all-out promotional blitz for its various products without having to substantially grow its advertising spend.

    Improved Operations

    Another driving force behind McDonald’s success in the last few years has been a company-wide push for improved operations. In a March 2009 article, the Wall Street Journal told readers about Ralph Alvarez, the Cuban-born ex-accountant who served as McDonald’s president and chief operating officer through the end of the year and spearheaded a full-fledged crusade to make McDonald’s more efficient. (Alvarez announced his retirement in December 2009, citing health reasons.) During his short-term leadership, however, his work included: 

    “…pruning gas-guzzling cars from the company fleet, pressing media buyers to negotiate lower advertising rates and putting the brakes on building new outlets on street corners where nearby development shows signs of weakness.” 

    While tackling these challenges, Alvarez is managing the company’s gigantic investments in the coffee drinks and other new product lines that have helped McDonald’s stand tall against the recession. He is so committed to his efficiency campaign that he reportedly visits stores unannounced wearing baseball caps and sunglasses to verify first-hand that his instructions are being followed.

    Rapid Price Adjustments

     The same Wall Street Journal piece also discusses how McDonald’s has begun using computer systems for in-store decision making. Using the “reams of customer data” at its disposal, McDonald’s now closely analyzes “everything from whether customers are trading down to smaller value meals or dropping cokes from their orders to exactly how much they’re willing to pay for a Big Mac.” Alvarez, who confessed to loving numbers, said that these kinds of computerized systems allow McDonald’s restaurants to rapidly adjust prices based on current customer demand.

    One result of this process occurred in China, where some restaurants reportedly slashed the price of certain combo meals by up to one-third – but only during lunch hours.

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    Popularity: 14% [?]