By David MacDonald M cDonald’s Corp. knows a thing or two about thirst. The world’s largest food-service has been meandering through a vast restaurant waste- land surrounded by lush sushi bars and upmarket cafes for longer than they’d like to admit. And with soda sales down for a 12 th straight year across the U.S., every mar- keting move approved by CEO, Steve Easterbrook seems like a step in the direction of one of these oases. The Dollar Menu was like McDonald’s canteen. No matter how sun beaten they’ve been during the course of the ongoing fast-food decline, the Dollar Menu kept them going. (They’re still winning the desert race with their $228 billion USD horse). But after pressure from health critics, the Dollar Menu is more or less a thing of McDonald’s past – like the McDLT or McPizza – and patrons have been corralled into grocery stores where falling food prices rain supreme. Easterbrook responded in kind. The two-for- $2 and two-for- $5 deals were competitive discounts aimed at those former Dollar Menu fanatics now pushing carts through crowed aisles.
But it seems as if McDonald’s only thinned-out the numbers in the breakfast aisle – at least for a while.
All-day breakfast contributed to last year’s 2.4 per cent revenue surge, but as is the case with so many other pro- motions, the hype was short-lived. Revenues are expected to drop nearly an entire percentage point in 2017 and 2018 With demand low for even the big-ticket items – cheese- burgers and chicken sandwiches – over consecutive quarters, the McCafe makeover seemed prudent. But reactive promotions of and renovations built around non-traditional menu items, it turns out, wasn’t the answer. That’s why McDonald’s is looking to a higher-margin, ever-popular menu item: Fountain drinks. Starting in April across the U.S., soft drinks of all sizes are going for $1. What’s more, small McCafe drinks like smoothies will be, for a limited time, available for $2. It’s unknown if this voluntary price-hit will fill those eames chairs and trickle down to even more competitive pricing – Wendy’s is still offering their four-for- $4 meal deal – but it’s safe to say that the cost-conscious will be satisfying their thirst, at least, at McDonald’s.
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APRIL 2017 • SPOTLIGHT ON BUSINESS MAGAZINE
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