McDonald’s Corporation (MCD): It’s Difficult to Beat This Fast Food Behemoth

When the going gets tough, the tough get going. McDonald’s Corporation (NYSE:MCD) has proved this again. Despite deterrents like weak consumer spending across the globe and declines in restaurant visits in the U.S., Big Mac has proved that its strategies are working. After months of turmoil, it has reported positive comps across the globe in the U.S., Europe, and Asia. Let us find out what is McDonald’s recipe for success.

May numbers

The May results were not attained overnight. The company had to suffer five straight months of comparative same store sales declines or minimal growth. Management had to do lots of brainstorming to come up with some excellent strategies – which worked.

The outcome was a 2.6% increase in system-wide same store sales in May, beating analyst expectations of a 1.9% increase. In the U.S., comps surged 2.4% vis-a-vis a 0.6% increase in April and 2.1% projected by analysts. In Europe, comparative sales increased 2%, whereas the figure edged up 0.9% in Asia, the Middle East, and Africa.

Dollar brings dollars

The dollar menu has been a million dollar idea in the U.S. McDonald’s Corporation (NYSE:MCD) has promoted this more aggressively than any other fast food chain. It has willingly accepted a hit on the bottom-line in order to drive traffic with its value menu options. It also has various offers like two Big Mac burgers for the price of one. The result has been six consecutive months of increasing market share in the U.S.

McDonald’s Corporation (NYSE:MCD) has shown peers like The Wendy’s Company (NASDAQ:WEN) and Burger King Worldwide Inc (NYSE:BKW) how to leverage value meal options for increasing traffic. Wendy’s has acknowledged that the disappointing 1% growth in same store sales in the first quarter was a fallout of weakness in $1 menu options. To set things right, it is introducing six solid items in the $0.99 space. It will also have eight items between $1.29 and $1.99.

Burger King Worldwide Inc (NYSE:BKW), too, has started promoting its value menu in hopes of reversing the 3% negative comps that it faced in the first quarter. It is offering two sandwiches for $5 and Whopper Jr burger for $1.29.

Experimenting with the menu

It is unbelievable but true — McDonald’s Corporation (NYSE:MCD) has as many as 140 items on its menu and there are 160 more in the pipeline. The company keeps introducing new items and pulling off old ones to keep the menu fresh.

In the U.S., the company recently removed the Angus Burger and brought in new specialty quarter pounder burgers like the Bacon Habanero Ranch, the chicken wraps, and smoothies. It has also expanded its breakfast offering with items like Egg McMuffin. Limited time McRibs complete the picture.

The company is a clear trend setter in menu innovations. Burger King recently launched 10 new menu items including wraps, specialty salads, smoothies, etc. and more coffee options through its tie-up with Seattle’s Best Coffee. The imprint of McDonald’s Corporation (NYSE:MCD) is clearly visible in all the new additions.