CASE STUDY: Celebrity-Backed Limited Time Offerings Boost McDonald’s Revenue

One of the most successful limited time offerings (LTOs) over the past year has been McDonald’s “Famous Orders” celebrity collaborations.

McDonald’s has been utilizing LTOs to attract consumers for years with items such as the McRib and Shamrock Shake. However, Famous Orders are now taking over the chain’s menu.

Last year, the fast-food giant first collaborated with rapper Travis Scott for his own meal, the first celebrity to get one with McDonald’s since Michael Jordan in 1992. Shortly after, the chain partnered with Colombian singer J Balvin for a meal including all his favorite menu items together.

More recently, McDonald’s released the BTS meal, a collaboration with Korean Boy Band BTS. The meal, launched in 49 countries, was the first Famous Order with custom packaging and app-exclusive content.

During the first seven days of the promotion, restaurant visits were up 12% over the previous week—the higher numbers of 2021 so far—according to a report from Gordon Haskett Research Advisors, reported Insider (June 5).

The success didn’t stop there, either. McDonald’s reported that the K-pop group’s promotion helped U.S. same-store sales outpace 2019 levels by double digits. U.S. same-store sales climbed 25.9% in the quarter and 14.9% on a two-year basis, while net sales rose 57% to $5.89 billion, topping expectations of $5.6 billion.

“It has been, to borrow a BTS lyric, Dynamite,” said CEO Chris Kempczinski during the company’s second quarter earnings call. “We saw significant lifts in McNuggets sales and record-breaking levels of social engagement.”

The meal was also popular on social media, leading McDonald’s to trend number two on Twitter globally and number one in the U.S, the CEO noted.

Now, McDonald’s has replaced BTS with hip-hop artist Saweetie for its fourth celebrity meal in 12 months. Starting August 9, the “Saweetie Meal” will debut in the U.S., featuring a barbecue sauce that’s being named Saweetie ‘N Sour, reported CNN Business (July 29).

MENUS SEE STEADY INCLINE OF LTOs

Over the past year, entrees and appetizers in the U.S. restaurant industry—the two largest mealparts by item count—have seen decreases of 4 % and 5.5% respectively according to Lizzy Freier, senior research manager of menu at Technomic. But the story isn’t all negative.

“Looking at the number of LTOs at Top 500 chains over the past five years, we’ve actually seen a relatively steady incline,” said Freier in a statement to The Food Institute. “Comparing the number of LTOs launched in 2016 to 2020, there’s been a 25% uptick. And that incline even persisted from 2019 into 2020—we actually saw a 9% uptick in LTOs.”

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OTHER FAST-FOOD CHAINS PROFIT FROM LTOs

McDonald’s isn’t alone in seeing positive results from LTOs. In Yum Brands’ second quarter earnings call, CEO Joey Wat mentioned that KFC’s LTO launch of the Double Down, a chicken sandwich, generated strong social buzz, and was well-received by consumers.

Yum Brands-owned Taco Bell has also seen success from LTOs, with one of the most famous being its Nacho Fries. The fan-favorite was recently brought back for the seventh time in four years.

When they made their first U.S. appearance in 2018, the fries became the most successful launch in Taco Bell history, Business Insider reported. The LTO was ordered 53 million times between January and April, and same-store sales increased 1% in the quarter when fries were available, with 25% of all Taco Bell orders during that timeframe including fries.

 

Learn more during The Future of Menus webinar on Aug. 10 at 2 p.m. ET, co-hosted by The Food Institute and DMA. Lizzy Freier, senior research manager of menu at Technomic, will be joined by Cornell University’s Lilly Jan and Firebirds Wood Fired Grill’s Stephen Loftis in discussing more current and pending restaurant menu changes. 

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