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McDonald’s Incentivizes Healthier Eating as Growth Stalls

Filed under Advertising, International, Marketing, Pricing, Value Menu

McDonald’s has “regrouped” its U.S. menu, gathering a variety of its lower-calorie—and often lower-price—items and branding this aggregation as a Favorites Under 400 Calories menu. To encourage customers to order these foods and beverages, some of the items carry instant-win game pieces for McDonald’s “Win When the U.S. Wins Gold” promotion, which begins tomorrow. Game pieces also have a code that can be entered online to possibly win additional prizes (including $25,000 in gold).

The goal is to tell consumers that many McDonald’s foods are lower in calories than people have assumed. “This platform aims to empower our customers and employees to make choices that are right for their nutrition needs,” Neil Golden, Chief Marketing Officer, McDonald’s USA, said in a release announcing the initiative. “We’ve found that customers are surprised to learn about the calorie content of some of their favorite menu options at McDonald’s. In fact, customers may be surprised to know that about 80% of national menu choices are under 400 calories for the standard recipe.”

The Clubhouse Angus could be coming.

But McDonald’s hasn’t given up on premium-price or indulgent items. During this morning’s Q2 analyst call, CEO Don Thompson said the chain is considering launching a “pub-style” burger—such as the Clubhouse Angus (previously named the English Pub Burger) it has been testing—at the end of this year or “certainly next year.” Also under consideration are wraps, as forecast earlier, plus chicken and breakfast items that are inspired by overseas menu successes. (The McMorning Chicken breakfast sandwich from Austria would be a good choice.)

U.S. same-store sales for the quarter grew only 3.6%, coming in under Wall Street’s expectations, and the angry Street reacted accordingly. Value items always be be a “major factor” on McDonald’s menu, Thompson said, but premium-price options also will be provided to offset pressure on profit margins

Outside the U.S., McDonald’s will be battling what Thompson called “short-term pressures” with “tactical adjustments” that include promoting lower-price/value options. The chain also plans to increase its media spending, at least in Europe. Thompson and CFO Peter Bensen admitted that the dining-out market is shrinking in some European markets with faltering economies such as Spain, Portugal and Italy. Q2 same-store sales grew 3.8% in Europe, and rose just 0.9% in Asia/Pacific, Middle East and Africa.

“We understand what we are facing from the macroeconomic environment to an increasingly competitive landscape,” Thompson told analysts. He cited negative pressures on the “whole Informal Eating Out (IEO) market, including fast casual” that make customer–traffic growth difficult. A year ago, McDonald’s was boasting that it was boosting its share of the IEO in Europe. Today the watchword was “resilience,” with Thompson and Bensen each stating that McDonald’s resilience will keep its sales going through difficult economic “headwinds.”

Although Q2 also included the introductions of the Blueberry Banana Oatmeal and Cherry Berry Chiller, the value pricing of a 20-piece Chicken McNuggets for $4.99 on McDonald’s Extra Value Menu seems to have done best: Thompson said it boosted Chicken McNugget sales 11% over year-earlier levels.

Among the lower-calorie “Favorites” are the McDouble burger (390 calories), Angus Snack Wrap (390), Egg McMuffin (300), six-piece Chicken McNuggets (280), Fruit ‘N Yogurt Parfair (150) and McCafé Iced Latte (60).

Those not interested in carrot sticks can wander over to Jack in the Box, which today introduced Mini Corn Dogs, sold in five-piece orders.