McDonald's fixed customers' top complaint — and sales are soaring (mcd)

Reuters

McDonald's just posted its best quarterly same-store sales gains in years.

Sales at restaurants open at least a year jumped 5% globally, including a 5.7% increase in the US, for the quarter that ended December 31.

McDonald's says its turnaround efforts, particularly the launch of all-day breakfast in October, are driving the momentum.

According to the retail consulting firm Conlumino, the launch of all-day breakfast and other menu tweaks have fixed customers' top complaint about McDonald's: lack of menu choice and variety.

"While this has added to operational complexity," Neil Saunders, CEO of Conlumino, wrote of all-day breakfast, "it has been a vital step in providing more choice and variety — which, according to our research, are two of the main things that lapsed McDonald's customers mentioned as reasons for their defection.

"The early signs are that this step change has been successful in attracting back lost customers, especially over the important lunchtime period."

In addition to all-day breakfast, McDonald's has expanded its customizable-burger offerings and tested healthier items like kale salads in the past year.

While kale salads will "never the mainstay of McDonald's menu" and arguably are unlikely to attract highly health-conscious consumers, they are helping improve McDonald's public image, Saunders wrote.

But there's a downside to these changes. Adding menu items brings more complexity to kitchen operations and slows down service — which has been another complaint from customers and a main source of frustration from franchisees.

But McDonald's has no choice if it wants to be competitive, Saunders said.

"In our view this is very much a case of there being no alternative: the market has changed and the customer has slightly different priorities now to 10 years ago. McDonald's had to move with the times or face continued deterioration," Saunders wrote.

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