All-Day Breakfast stole the show when it comes to Mcdonalds (NYSE: MCD) recovery, but other initiatives are also laying the foundation for long-term success. Many of the company’s efforts are focused on better care of employees and tastier food.
In this segment of Focus on industry: consumer goods, Motley Fool analysts Vincent Shen and Sarah Priestley discuss the firm hand CEO Steve Easterbrook has applied to improve service, brand perception and the overall outlook for his business.
A full transcript follows the video.
This podcast was recorded on August 30, 2016.
Vincent Shen: One of the initiatives that many people have successfully attributed to Easterbrook is the all-day breakfast, with the complication of the menu being a big issue for overall customer service. And I think that has certainly had an impact on the customer experience. They just mentioned that trying to make restaurants run smoothly and efficiently, with all these different menu items, and the fact that it just takes longer, for example, people lining up trying to figure out what to order , this slows down all the work along the line.
Sarah Priestley: Absoutely. And you mentioned breakfast all day. Breakfast all day was a huge driver for them, as you can see in the quarterly results. And they actually deployed that in four months, which I think demonstrates that they’ve gone from being such a heavy and slow organization to being really quick to implement this. They launched it in October of last year, which is going to make it very difficult for them to compose for the coming quarter, I imagine.
But they also do other things. They went from margarine to butter for flavor. They use MSC certified fish; preservative-free in their chicken nuggets. They are moving away from antibiotics. They do a lot of things to improve the quality of the food they deliver. And some of those things that they do, obviously, that they use as promotion to support the products. But some things are not. They actually use sustainable beef sources, and they’re currently blending that at a low percentage to what they’re already using. And they’re going to gradually increase that until they use 100% sustainable beef. It’s not something they’ve talked about a lot, and it shows you, I think, that their quality is taken very seriously in the business, not necessarily just in advertising.
Shen: Yes, it’s not just about marketing to compete with Chipotle, for example, to say, “Hey, we’re sustainable too, we’re also giving you the healthier foods that many consumers seem to want these days.” “
Priestley: Exactly, yeah. I think they were heavily criticized before Easterbrook took over for treating millennials like a cohesive bunch and trying to promote healthy eating – kale was always the joke. I think it’s similar. They could be criticized for going with sustainability as a ploy, but I really think they’re trying to embody that. And I think, in general, it’s just becoming a better organization. They take better care of employees. They increased wages. There is tuition assistance, which is fantastic. I think 5,000 people qualify for Archways to Opportunity, which helps them. And it had a direct impact. This cuts down on turnover and it also gives customers friendlier and happier people to interact with when they go to McDonald’s.
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