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The Food Institute Blog

The Food Institute Blog

McDonald's Sees Sales Boost from All-Day Breakfast, Global Expansion
Posted on January 26, 2016 by Jennette Zitelli

McDonald's has been working to bring customers back into its stores and increase sales. It recently released a new value menu, is experimenting with self-service kiosks and customization, and is even testing table service. One of its most successful changes has been expanding its breakfast menu to be served all day, which was initially questioned, as people worried if it would help or hurt them.

When the change was made in October, fans were overwhelming positive about the news, but analysts and franchisees had other ideas. Amid the avian flu epidemic, analysts warned that the menu change could exacerbate the existing egg supply issues in the U.S., and it would possibly raise prices for consumers. Franchisees were also concerned at the beginning, finding the new menu slowed down service, led to lower customer order totals, and made the kitchen chaotic. Some said it was not generating new traffic, just bringing in the same customers who were spending less on the inexpensive breakfast items. Some even said it increased expenses because new staff needed to be hired to handle the extra work.

However, now that we are a few months in to the new menu, it is obvious all-day breakfast has been a boon for the chain. After seeing its U.S. sales fall for two years up to the third quarter of 2015, McDonald's same-store sales at U.S. outlets rose 5.7% in the fourth quarter, which was the best quarterly growth in nearly four years and greatly surpassed forecasts of 2.7%, according to Reuters. All-day breakfast was one of the main points attributed to the success, as well as the turnaround plan by CEO Steve Easterbrook, which involved making the menu simpler, improving service times and raising worker wages.

Globally, McDonald's also did well, with same-store sales rising 5%, 1.8 percentage points more than analysts expected. The chain is still recovering from a food safety scandal in China, but same-store sales rose 4%, the second straight quarter of growth after a year of falling sales. These sales are still below pre-scandal levels, though. An analyst from China Market Research Group noted, "It's back to par rather than getting ahead too much, but it's good for them to see stable sales."

McDonald’s also plans to open more than 60 restaurants in Russia in 2016, continuing to increase its expansion from the previous year, reported The Globe and Mail. The company has made “serious adjustments” to its business model because of sanctions of food imports and the country's weakened economy. Its spending will focus on modernization and further investment in local supply as well as new openings. The chain has increased its share of local supply to 85% since opening in the country in 1990. It hopes to supply only from local companies in the future, to protect against future import bans and economic changes.

 

About the Author

Jennette Rowan
Product Manager
The Food Institute

Jennette writes and edits the Food Institute’s annual publications, such as Food Business Mergers & Acquisitions, The Food Industry Review and The Almanac of the Canning, Freezing, Preserving Industries.  She also handles marketing and promotions for books, seminars and the monthly webinar series. Additionally, she writes for the daily news update, Today in Food, and periodically contributes to the weekly Food Institute Report. She has a background in non-profit and environmental marketing, programming and writing, and joined the Food Institute in 2013 with a degree in Communication Studies from Rowan University.

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