Start with a heaping serving of what customers have been clamoring for, then add a dash of unseasonably warm weather and you have the secret formula that McDonald's has been seeking for years. It reported yesterday that sales at U.S. stores open for at least 13 months jumped 5.7% for the quarter ended Dec. 31.
It’s no coincidence that it rolled out all-day breakfast offerings nationally in 14,300 restaurants on Oct. 6.
The performance is “a testament to the swift changes we made and the early impact of our turnaround efforts,” CEO Steve Easterbrook says in a release announcing fourth-quarter and full-year 2015 results. “We enter 2016 committed to managing the business for the long term and aligned as a system around the critical imperative that we must run great restaurants each and every day for our valued customers.”
For the year, global comparable sales rose 1.5%.
“When Easterbrook took the reins last March, McDonald’s was in a grim state,” Alison Griswold writes for Quartz. “Sales had plunged. Workers were protesting. Ronald McDonald had gotten a terrifying makeover. Defeat was palpable. The signature ‘I’m lovin’ it’ slogan was tweaked to ‘lovin’ beats hatin’.”
Indeed, “each time McDonald's has announced how much money it's making, the company has been forced to share an embarrassing truth: Americans are eating less and less of its hamburgers, chicken nuggets and French fries,” Roberto A. Ferdman writes for the Washington Post. “The routine became so consistently depressing that McDonald's decided to quit sharing monthly performance data altogether in March."
“The primary driver of domestic sales growth in the fourth quarter came from the company’s decision to start selling a selection of nine breakfast items after 10:30 a.m., answering a demand from customers that dates back years. That also represented arguably the biggest news in the entire quick-service restaurant sector during the period,” reports Jonathan Maze for Nation’s Restaurant News.
The performance of all-day breakfast “exceeded our launch expectations and for a period longer than we anticipated,” Easterbrook said during a conference call with investors. And it helped it to regain “market share we’ve given up in recent years.”
But Easterbrook also went out of his way to make the point that all-day “sausage burritos and hotcakes weren’t the only initiatives serving up good results,” Beth Kowitt reports for Fortune.
“Breakfast was the ‘headline grabber’ but other initiatives were contributing as well, he said, pointing to a streamlined menu, improved order accuracy, investments in food quality and ingredients, and menu simplification,” Kowitt writes. “Easterbrook likely wants to turn the focus away from breakfast because the company needs more force to propel the company from turnaround mode to prolonged growth. ‘We don’t want it to be a single initiative turnaround,’ he said.”
Easterbrook “has enacted numerous changes” already, reports Julie Jargon for the Wall Street Journal.
“He has pared down the menu, provided customers with more transparency about how its food is made, raised wages for workers at company-owned stores and announced that McDonald’s will switch to antibiotic-free chicken and cage-free eggs in the U.S.," Jargon writes.
“There have been structural and management changes as well, aimed at giving local markets more autonomy over the food McDonalds serves so it can meet local taste preferences,” Jargon continues.
The New York Times’ Stephanie Strom reports that analysts on the earnings call “sought insight into how the McDonald’s app, which became available for downloading in July but was not advertised until October, was affecting business.”
The app promises a free McCafe beverage after the purchase of five drinks, a “new offer” every week, and “exclusive content just for you” to registered users.
“Easterbrook said that seven million people had downloaded the app, though fewer went on to register…,” Strom reports, and he revealed that “average checks were higher among customers using the app to redeem a reward.”
CNN Money’s Paul R. La Monica also points out that “since Easterbrook became CEO, McDonald's has added several new burgers — such as the Pico Guacamole and Buffalo Bacon — and also gave diners more choices so they could customize the sandwiches. It also launched a new Buttermilk Crispy Chicken sandwich.”
“Globally, McDonald's same-restaurant sales rose 5%, above the 3.2% expected by analysts polled by research firm Consensus Metrix,” points out Reuters’ Sruthi Ramakrishnan.