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McDonald's Targets Millennials, Trendy Eaters with Major Remodel Plan
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On Tuesday, McDonald’s (MCD - Free Report) announced its plan to invest $6 billion to renovate and update its U.S. restaurants. Although it has already announced its general plan earlier this year, the burger chain disclosed more intricate details today.
This move is part of the burger giant’s Experience of the Future project. Its focus is on modernizing the décor and inventories of its stores. As for the décor, McDonald’s will install new furniture and exterior designs. As for the inventories, it is going to refurnish the stores with upgraded digital self-order kiosks and digital menu boards.
Not only is McDonald’s striving to change appearances, but it is also looking to make the entire ordering and eating process more convenient for customers, both in-store and via curbside pickup.
Regarding this ambitious plan, McDonald’s CEO Steve Easterbrook said, “When it’s a full modernization here in the U.S., we’re getting mid-single digit sales uplift,” where as “when it’s just adding the Experience of the Future elements on modernized restaurant, we’re still getting 1 to 2 percent uplift.”
There could be a couple reasons behind this plan. First, in the recent second quarter, McDonald’s posted its slowest U.S. same-store sales growth in over a year. Sales at company-owned restaurants dived by 27 percent and same-store sales in the U.S. grew at a rate of 2.5 percent, which is much slower than expected.
Although McDonald’s beat Wall Street’s estimates for earnings, it was mostly with the aid of the jump in international sales. On the other hand, sales in U.S. plunged. A revamp might perhaps help with this situation.
Also, the Big Mac is celebrating its 50th birthday. However, the iconic burger of America might not be as popular as it once was. In 2016, McDonald’s showed that only one out of five millennials has tried the Big Mac. With the ever-growing healthy eating trends, especially amongst Millennials, the decrease in popularity of the Big Mac isn’t too surprising.
With the emergence of healthy fast food chains and their gaining popularity, the more conventional fast food chains like McDonald’s and Taco Bell might be facing a challenge. Additionally, newer burger chains such as Shake Shack (SHAK - Free Report) and Five Guys also pose threats.
With its renovation plan, McDonald’s is trying to keep up with the trendy Millennials. Although McDonald’s isn’t changing menus, it doesn’t hurt to make the outside appearance more modern.
Finally, another consumer trend is convenience coupled with high-tech platforms. By changing the kiosk and order platforms, McDonald’s is another store trying to meet its customers’ needs.
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McDonald's Targets Millennials, Trendy Eaters with Major Remodel Plan
On Tuesday, McDonald’s (MCD - Free Report) announced its plan to invest $6 billion to renovate and update its U.S. restaurants. Although it has already announced its general plan earlier this year, the burger chain disclosed more intricate details today.
This move is part of the burger giant’s Experience of the Future project. Its focus is on modernizing the décor and inventories of its stores. As for the décor, McDonald’s will install new furniture and exterior designs. As for the inventories, it is going to refurnish the stores with upgraded digital self-order kiosks and digital menu boards.
Not only is McDonald’s striving to change appearances, but it is also looking to make the entire ordering and eating process more convenient for customers, both in-store and via curbside pickup.
Regarding this ambitious plan, McDonald’s CEO Steve Easterbrook said, “When it’s a full modernization here in the U.S., we’re getting mid-single digit sales uplift,” where as “when it’s just adding the Experience of the Future elements on modernized restaurant, we’re still getting 1 to 2 percent uplift.”
There could be a couple reasons behind this plan. First, in the recent second quarter, McDonald’s posted its slowest U.S. same-store sales growth in over a year. Sales at company-owned restaurants dived by 27 percent and same-store sales in the U.S. grew at a rate of 2.5 percent, which is much slower than expected.
Although McDonald’s beat Wall Street’s estimates for earnings, it was mostly with the aid of the jump in international sales. On the other hand, sales in U.S. plunged. A revamp might perhaps help with this situation.
Also, the Big Mac is celebrating its 50th birthday. However, the iconic burger of America might not be as popular as it once was. In 2016, McDonald’s showed that only one out of five millennials has tried the Big Mac. With the ever-growing healthy eating trends, especially amongst Millennials, the decrease in popularity of the Big Mac isn’t too surprising.
With the emergence of healthy fast food chains and their gaining popularity, the more conventional fast food chains like McDonald’s and Taco Bell might be facing a challenge. Additionally, newer burger chains such as Shake Shack (SHAK - Free Report) and Five Guys also pose threats.
With its renovation plan, McDonald’s is trying to keep up with the trendy Millennials. Although McDonald’s isn’t changing menus, it doesn’t hurt to make the outside appearance more modern.
Finally, another consumer trend is convenience coupled with high-tech platforms. By changing the kiosk and order platforms, McDonald’s is another store trying to meet its customers’ needs.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>