McDonald's Menu Upgrade
Boosts Meal Prices and Results
Turnaround of Giant Chain
Helped by Upscale Items;
A $4.50 Cobb Salad
It 'Looked Almost Healthy'
McDonald's Corp., the world's largest restaurant chain, has hit upon an unlikely recipe for a turnaround: selling pricier items such as salads laced with arugula and radicchio.
In early 2003, McDonald's was smarting from its first-ever quarterly loss as a public company. Its customers were defecting to rival chains like Panera Bread Co., Cosi Inc. and Applebee's International Inc.
The iconic burger giant responded with a risky departure from its longtime strategy of targeting children and young men with inexpensive food. It rolled out such menu items as the $4.50 California Cobb salad with grilled chicken and the $3.89 grilled chicken club sandwich. Prices that high had never been seen underneath the golden arches.
McDonald's executives say they were aware of the risk. "We know that a significant amount of our customers are very sensitive to price," says Mike Roberts, the company's president and chief operating officer. "We know that everyday affordability is an enormous part of the McDonald's equation."
Nevertheless, its customers bit. Last year, the average check total increased by 5% to about $5, a significant increase in an industry that has long considered itself highly price-sensitive. Such increases add up fast when multiplied by the eight billion customer visits to McDonald's in the U.S. each year.
The new strategy has helped fuel three years of growth. Revenue increased to $20.5 billion in 2005 from $15.4 billion in 2002. Net income grew to $2.6 billion from $893.5 million over that period. Its stock has bounced back from a low of $12.12 in March 2003 to $36.06 yesterday in 4 p.m. composite trading on the New York Stock Exchange.
Other fast-food chains have been pursuing different strategies. Hardee's, owned by CKE Restaurants Inc., and Burger King Corp., for example, are focusing on the industry's traditional core customers -- young men -- by playing up their large portions in advertisements. Burger King Chief Executive Greg Brenneman has said that a typical Burger King sells just three salads a day, compared with 300 Whoppers. Salads, he says, help take away the "veto vote" of mothers who sometimes prefer such fare to burgers and fries.
McDonald's recent success selling salads and other premium fare -- after years of failed efforts to do so -- is a testament in part to good timing. More upscale chains such as Cosi and Panera have paved the way by getting baby boomers used to lunching on jazzed-up salads and sandwiches in lieu of more traditional fast food. McDonald's is reaching for that market.
After scanning the menu at a McDonald's in downtown Chicago Friday afternoon, Terry Warner, a 50-year-old electrical engineer on a business trip from Ohio, selected the new $5.95 premium meal of white-meat chicken strips. "It was the only thing on the menu that looked almost healthy," because it's chicken rather than beef, he said.
Still, he said, he never takes his children to McDonald's, despite the new menu offerings. "We feed them real food," he says. "They'd want the rest of the stuff on the menu, and I don't want to be bad father telling them 'no.' "
At McDonald's, premium products like salads and white-meat chicken have accounted for more than half of same-store sales growth in the U.S. since 2003, estimates David Palmer, a restaurant-industry analyst for the investment research arm of UBS AG. Such offerings could also help McDonald's battle the public-relations taint left by the widely publicized 2004 documentary film, "Super Size Me," which cast the chain as a merchant of dangerously unhealthy food.
Now, executives at the company's Oak Brook, Ill., headquarters are debating how much further to expand the menu beyond the core burgers and fries. To stretch it too far is to risk alienating the chain's most loyal customers. In addition, long menus add strain on franchisees already scrambling to serve customers fast.
Limits of Expansion
Richard Adams, a retired McDonald's executive and franchisee who now works as a franchisee consultant, says that broadening the menu too far risks confusion. "They've gone as far as they can go in complicating the menu," he says. "I don't know if they can add any more products without further confusing the customer and the restaurant staff. That's the biggest complaint I get from franchisees...You try to push people through the drive-thru, but you give them a menu that takes a half-hour to read."
Mr. Roberts says he's aware of the concern. "No one wants to sit in a drive-thru for seven minutes," he says. McDonald's recently scaled back tests of deli-style sandwiches, dubbed "Oven Selects," partly because they take too long to prepare. Still, he says, "we'll go as far as the customer will let us" in introducing new items. "I'm thinking different ingredients on the edge of being mainstream, or more ethnic tastes, spicier food. There's more room to grow."
McDonald's, founded in 1955, was the industry's standard-bearer for decades, and other fast-food chains followed many of its leads. By the time it hit the one-billion-burgers-sold mark in 1963, the company and its franchisees dominated the U.S. market.
By the late 1990s, however, more baby boomers who grew up gobbling Quarter Pounders with Cheese had begun looking for healthier, more varied fare. They found it at Panera, Subway, Applebee's and other chains. They didn't mind paying more for it, either. At Panera, for example, lunch customers pay $8.51 per transaction, on average, more than $3 more than the average McDonald's check. At the same time, Starbucks Corp. was luring breakfast customers from McDonald's with its premium coffees. McDonald's and its rivals, chiefly Burger King and Wendy's International Inc., battled for customers through price wars.
McDonald's executives now acknowledge that the quality of their food had deteriorated, and their product mix was failing to connect with consumers. The chain tried occasionally to boost prices with limited-time offers, such as the $2.89 Grilled Chicken Flatbread Sandwich in 2001. But customers resisted. In January 2003, the company reported its first quarterly loss since going public in 1965.
By then, Chief Executive Jack Greenberg had resigned and the company had begun a reassessment of its U.S. business. McDonald's learned that women, and particularly mothers, thought there wasn't enough variety on the menu, Mr. Roberts says. "They were coming in some ways because their children wanted to come, not because they did," he says.
The company moved to improve the taste of core menu ingredients such as cheese and ketchup. It reconsidered how its buns were toasted, and widened the diameters of its straws so people could drink more easily.
But its broader goal was to improve the quality of the menu and add variety to it. Although the company was reluctant to stray too far from its longtime commitment to offering cheap food, it wanted to boost the average customer's check total.
In the mid-'80s, McDonald's had briefly tested salads priced at slightly more than $2, but it dropped the project amid poor sales. "There was a time when people said, 'You'll never be able to sell a salad for more than $1.99,' " Mr. Roberts recalls.
This time, executives decided on a two-tiered menu. Certain popular items would be priced low -- double cheeseburgers would be offered at $1 -- to generate traffic. New items would carry prices higher than customers had ever seen. McDonald's executives were betting that customers would pick and choose across the menu, mixing, for example, a premium salad with a $1 parfait. The goal, executives say, was to boost the average check for two to more than $12.
Their challenge was to create new products that customers would pay more for. The McGriddle breakfast sandwich was one important experiment. Starbucks and Dunkin' Donuts had been stealing McDonald's breakfast business, which accounts for more than one-quarter of sales at many franchises. McDonald's had already succeeded making bacon, eggs, sausage and hash browns portable. But it hadn't figured out how to do the same with pancakes, a popular McDonald's breakfast item.
Product development specialists tried cooking pancake batter in muffin pans. They tried mixing chopped sausage into the batter. Eventually, executives decided to use conventional looking pancakes as "bread" for a sandwich, with sausage patties and other add-ons wedged inside. Adding drippy syrup was out of the question. So the company developed maple-flavored syrup crystals to bake into the pancakes.
At first, customers were reluctant to pick up the concoction, says Wendy Cook, U.S. vice president for marketing and menu management. The company rolled out ads showing people eating McGriddles with their hands.
Targeting Adults
McDonald's target customer for the new item was the adult traveling to work. Ms. Cook says McDonald's executives ordered up surveys to determine whether customers would be willing to spend $2.39 for the item, which would make it one of the chain's priciest breakfast items. She says about 80% of survey respondents said they would. The Bacon, Egg & Cheese McGriddle costs about $2.60.
Nicole Tinnin, a 34-year-old Chicagoan, says that two or three times a week, when she wants to "splurge," she buys a McGriddle for breakfast.
In the 12 months after they were introduced in June 2003, McGriddles accounted for about 40% of McDonald's same-store sales growth in the U.S., estimates Mr. Palmer, the restaurant industry analyst. McDonald's disputes that estimate, but declines to quantify sales for any single product.
Salads were a second part of the premium-menu strategy. In the late 1980s, McDonald's had followed Wendy's into the salad market. But its customers didn't take to such test offerings as Chicken Salad Oriental. McDonald's continued trying other salads through the 1990s, but none caught on.
In recent years, however, family-style restaurants such as Applebee's have succeeded in appealing to customers with premium salads. By 2002, Ms. Cook's team had begun testing various salads with consumers. They tried cold chicken atop lettuce. They tested hot chicken. In the end, they settled on four new salad items: Bacon Ranch, Caesar, California Cobb, and Fruit & Walnut, ranging in price from $2.99 to $4.50.
Getting the right lettuce mix -- something more than just iceberg -- was critical. For color, flavor and texture, McDonald's decided on a blend of 16 lettuces, including baby red romaine, baby green leaf, baby spinach, arugula and radicchio.
The company drafted new quality-control standards for lettuce suppliers, including strict rules on how the lettuce should be washed and cut. Taylor Farms, based in Salinas, Calif., became a major supplier. It provides McDonald's with about 800,000 pounds of specialty salad mix each month, along with about 900,000 pounds of iceberg lettuce. Taylor's factory has expanded twice in recent years, mostly to accommodate demand from McDonald's.
Taylor, in turn, depends on Stan Pura, who grows lettuce in Gilroy in North-Central California, to supply much of the "spring mix" and iceberg lettuce McDonald's uses. He has rented additional land and has begun using a mechanical harvesters to meet demand.
Mr. Palmer, the analyst, estimates that salads represented between 15% and 20% of McDonald's same-store sales growth in the U.S. in the 12 months after their introduction in March 2003. McDonald's disputes that estimate as well, but declines to provide sales figures.
McDonald's executives now are debating how much further to expand the menu with premium products. They are testing a salad containing Edamame, a soybean used in East-Asian dishes. Ms. Cook concedes that "only a small portion of the population knows what it is." But customers, she says, "expect more choices and options than they've had in the past."
麦当劳的战略转变及其效果
全球最大的餐饮连锁企业麦当劳公司(McDonald's Corp.)突然想出了一份转型菜单，虽然看上去有点不太可能：出售更昂贵的食品，例如配有芝麻菜和菊苣的沙拉。
2003年年初，麦当劳黯然公布了公开上市以来的第一份季度亏损报告。麦当劳的客户纷纷投奔竞争对手Panera Bread Co.、Cosi Inc.和Applebee's International Inc.等公司的连锁餐厅。
身为快餐业的代表，麦当劳做出了一个相当危险的回应，放弃了一贯坚持的以儿童和年轻男性为主要客户的低价战略，推出了标价4.50美元的California Cobb沙拉配烤鸡，以及3.89美元的烤鸡俱乐部三明治这些从未在麦当劳金色拱形标志下出现过的高价食品。
麦当劳的高层管理人士表示，他们深知风险所在。“我们知道我们的大部分客户对价格都相当敏感，”公司总裁兼首席营运长迈克?罗伯茨(Mike Roberts)说，“我们也知道日常价格是麦当劳风格的重要部分。”
但不管怎么说，客户咬钩了。去年，麦当劳每餐均价上涨了5%，达到5美元左右。这对一个长期被看作价格敏感领域的行业来说，如此涨幅实在可观。再乘以美国市场每年80亿顾客光顾麦当劳餐厅的规模，简直让人叹为观止。
这套新战略推动麦当劳实现了连续三年的增长。2005年，该公司收入已从2002年的154亿美元增至205亿美元，净利润从8.935亿美元增至26亿美元。股价也从2003年3月的低点12.12美元增至今年2月12日的36.06美元。
其他的快餐连锁企业却在推行截然不同的战略方针。CKE Restaurants Inc.旗下的Hardee's，还有Burger King Corp.，都全力开发快餐行业的传统核心客户群体──青年男性。Burger King首席执行长格雷格?布伦尼曼(Greg Brenneman)曾表示，普通的Burger King餐厅每天一般能卖出3份沙拉，但大号汉堡却能卖出去300个。
历经多年失败，麦当劳最近终于在出售沙拉和高价食品方面取得了成功，这要部分归功于良好的时机选择。越来越多的高档连锁餐厅，例如Cosi和Panera，已经铺平了道路，让婴儿潮一代的顾客逐渐适应了花色各异的沙拉和三明治，放弃了更传统的快餐食品。麦当劳恰逢其时。
50岁的电气工程师特里?沃纳(Terry Warner)从俄亥俄州到芝加哥出差。一个周五的下午，沃纳坐在市中心一家麦当劳餐厅里，浏览一遍菜单后，他点了一份新推出的标价5.95美元的鸡丝套餐。“整份菜单上，只有这个看上去最像健康食品，”因为是鸡肉（白肉），而不是牛肉。
不过，他说自己从没带孩子去过麦当劳，哪怕麦当劳有了这样的新食品。“我让他们吃真正的食物，”他说，“这份菜单上，除了这个，他们都想尝尝，我可不想做个坏爸爸，总是说‘不’。”
瑞士银行(UBS AG)投资研究部门的餐饮业分析师大卫?帕尔默(David Palmer)估算，2003年以来，麦当劳在美国市场的同店销售额增幅的一半都要归功于沙拉和白肉/鸡肉这类高价食品。它们也帮助麦当劳挡住了2004年的一场公关冲击，当年反响很大的一部纪录片《超码的我》(Super Size Me)就把麦当劳描绘成了一家出售不健康食品的连锁企业。
眼下，麦当劳的高层管理团队正在讨论的主题是，在汉堡包和炸薯条这些核心食品之外，公司还需要把食品种类扩充多少。范围太大的话，就有可能失去最忠诚的客户群体，再说，菜单太长也不符合快餐的要求。
扩张界限
曾经加入麦当劳管理层、现已退休的理查德?亚当斯(Richard Adams)认为，菜单内容太多难免引起混乱。“他们已经把菜单弄得够复杂的了，”他说，“真不知道他们还能增加多少内容，还不能让顾客和员工一头雾水。这是经销商抱怨最多的地方...……一边试图吸引客户在驾车窗口点餐，一边又塞给他们一份足够看上半个钟头的菜单。”亚当斯现在的工作是特许经销商顾问。
罗伯茨表示他很清楚这种担忧。“在驾车窗口点餐的人连7分钟都不愿等，”他说。麦当劳最近取消了试销的deli风味三明治Oven Selects，就是因为烹制时间太长。不过，罗伯茨说，“我们会在顾客能够接受和允许的限度内尽量多地”推出新产品。“我正在考虑尝试主流配料之外的特色配料、或者更有地方特色的风味、或者更辣的食品，发展空间还很大。”
始创于1955年的麦当劳数十年来一直是整个行业的标准，其他快餐连锁店在很多方面都效仿它的做法。1963年麦当劳买出了第10亿个汉堡，从此占据了美国市场的霸主地位。
但是，到了90年代末期，那些吃著芝士大汉堡(Quarter Pounders)长大的婴儿潮一代开始寻找更健康、更多口味选择的食品了。Panera、Subway和Applebee's等连锁店纷纷进入他们的视线，他们并不在乎更高的价格。比如说，Panera餐厅的一份午餐一般要花费8.51美元，比麦当劳午餐的平均价格高出3美元。而星巴克(Starbucks Corp.)，则以味美价美的咖啡抢走了不少麦当劳的早餐顾客。而与此同时，麦当劳和Burger King以及Wendy's International Inc.这几家竞争对手正在大打价格战。
麦当劳的高层管理人员现在承认，产品质量的确曾经下降，产品组合也曾经远离顾客需求。公司也曾经间或尝试过限期提价的做法，例如2001年推出的2.89美元的板烧鸡腿汉堡。但顾客并不买帐。2003年1月，麦当劳发布了1965年上市以来的第一份季度亏损报告。
那时，麦当劳首席执行长杰克?格林伯格(Jack Greenberg)已经辞职，公司开始重新评估美国业务。罗伯茨说，麦当劳后来得知，女性，尤其是母亲们觉得麦当劳食品种类不够丰富。“她们有时会来光顾，但那是因为她们的孩子想来，而不是她们自己想来。”
麦当劳开始采取措施，改进主要食品的配料口味，例如芝士和番茄酱等；重新考虑怎样烘烤小圆面包，味道才会更好；还加大了吸管的直径，方便人们啜饮。
但更大的目标是提高产品质量、扩大产品种类。虽然不愿太快离开奉行已久的提供廉价食品的承诺，麦当劳还是想提高平均价格。
80年代中期，麦当劳曾经短期试销过2美元以上的沙拉，但因销量不佳而放弃。“那时人们都说，‘超过1.99美元的沙拉永远也卖不出去’，”罗伯茨回忆道。
但这一次，公司高层决定双管齐下。某些畅销食品仍然维持低价──双层芝士汉堡只卖1美元──旨在吸引客流。新产品则标以前所未有的高价。公司管理层认定，顾客会根据菜单混合搭配，比如说一份高价的沙拉配一份1美元的特价甜点。管理层表示，这样做的目的是把顾客每餐的平均花费提高到12美元以上。
他们需要克服的挑战就是开发出顾客愿意掏钱的新产品。McGriddle早餐三明治是一项重要尝试。星巴克和Dunkin' Donuts一直在和麦当劳争夺早餐生意，这占很多特许经销商销售额的四分之一还多。麦当劳在提供外卖的熏肉、鸡蛋、香肠和炸薯饼方面已经大获成功，但还不知道怎么才能让畅销的热香饼也同样成功。
产品开发专家们尝试著用杯状烤具来烘烤，也试过把切碎的香肠掺到面糊里。最终，管理人员决定把原样的热香饼当作“面包”，来配置三明治，中间夹上香肠肉饼等。再添糖汁显然不行了，所以公司开发了一种枫糖块，烘烤的时候一起加进去。
公司负责美国市场营销和菜单管理的副总裁温迪?库克(Wendy Cook)说，刚开始，顾客并不想尝试这种新产品。麦当劳于是大做广告，向人们展示用手拿著McGriddles汉堡吃的镜头。
瞄准成年顾客
麦当劳这些新产品的目标顾客是上班路上的成年人。库克说，公司管理层安排了一次调查，看看人们愿不愿意买这份定价高达2.39美元的早餐食品。她说，大约80%的受访顾客都说愿意。综合了熏肉、鸡蛋和芝士的McGriddle汉堡定价约为2.60美元。
34岁的芝加哥人妮可?蒂尼斯(Nicole Tinnin)说，每周总有那么两三次，她想来一顿“丰盛”早餐的时候，就会买个McGriddle。
餐饮业分析师帕尔默估计，2003年6月推出后的12个月内，McGriddles汉堡就占到麦当劳美国市场同店销售额增幅的大约40%。麦当劳驳斥了这项估算，但拒绝透露任何一项食品的具体销售数据。
沙拉是高价战略的第二步。80年代末，麦当劳跟著Wendy's进入了沙拉市场，但顾客对Chicken Salad Oriental等新产品并不感兴趣。整个90年代，麦当劳不断推出新的沙拉品种，但没有一种大获成功。
但近几年，Applebee's等家庭式餐厅成功地吸引顾客尝试了高价的沙拉品种。2002年之前，库克的团队就开始测试各种口味的沙拉，供顾客品尝，有冻鸡肉配生菜，还有其他的热鸡肉品种，最终落实到四种新口味：Bacon Ranch、Caesar、California Cobb，以及Fruit & Walnut，售价从2.99美元到4.50美元不等。
搭配好不同种类的生菜是关键，从色泽、口味和质感，都要注意。麦当劳最终选定了16种生菜的搭配。
麦当劳为生菜供应商制定了新的质量标准，连怎样洗怎样切都事无巨细写得一清二楚。加州的Taylor Farms成了主要的供应商，每个月向麦当劳供应大约80万磅各类特制沙拉，还有大约90万磅各类生菜。这几年，Taylor的厂房扩大了一倍，主要就是为了麦当劳的需求。
Taylor反过来也依赖生菜种植商Stan Pura的供应，后者为此租种了更多土地，开始使用收割机收割，以满足需求。
据分析师帕尔默估计，2003年3月推出沙拉新品之后的12个月内，沙拉的销售额占到麦当劳美国市场同店销售额增幅的15%-20%。麦当劳同样反驳了这项数据，但也没拿出具体数据。
麦当劳高层管理人员现在正在讨论，还要把高价产品的种类扩大多少。他们正在尝试一种添加了Edamame的沙拉，Edamame是东亚饮食中常用的一种大豆。库克认为，“没多少人知道它到底是什么”，但顾客们“总是在期待更多选择、更多花样”。
