McDonald’s CEO: Bigger burgers are coming
By Danielle Wiener-Bronner, CNN
New York (CNN) — McDonald’s has a burger strategy to spark growth in the next few years. That strategy can be boiled down to one word: More.
“In the US, in a number of markets, around the world, having a larger burger is an opportunity,” CEO Chris Kempczinski told CNN in an interview.
“We’re working on that,” he added. “That is something that you should expect in the future.”
It’s not just more burger in your burger. It’s more everything. The burger chain plans to open thousands more restaurants. It wants to add 100 million members to its loyalty program, which nudges customers into spending more. And it’s investing in more marketing campaigns to get people craving its burgers and fries — and, increasingly, chicken sandwiches, too.
Bigger burgers
McDonald’s has already been working on a plan to improve how its burger tastes. But it’s learned that in addition to softer buns and gooeyer cheese, people also want a more sizable burger.
“We’ve listened to our customers. And we understand their desire for larger, high-quality burgers that fill you up,” said Jo Sempels, who oversees markets where McDonald’s has licensed its brand, during an investor event on Wednesday.
McDonald’s plans to test options in limited markets and, once it finds the best one, roll it out more broadly, Sempels said.
That’s a similar approach to how McDonald’s landed on the McCrispy chicken sandwich, after failing for years to come up with the right recipe and branding. Now, Sempels noted, chicken amounts for $25 billion in annual sales across the system, just like beef.
McDonald’s plan for bigger burgers comes at a time when many customers are looking for ways to spend less — and as a pricey McDonald’s burger has become something of a symbol of inflation.
But the coming burger, though bigger, shouldn’t break the bank. “We think we’re going to be able to deliver a great tasting large burger at a superior value to what [customers] can get anywhere else,” Kempczinski said.
More restaurants
In addition to selling larger burgers, McDonald’s wants to be everywhere.
The burger chain plans to have 50,000 locations globally by 2027, it said in a release Wednesday. As of September 30, there were roughly 41,000 McDonald’s establishments in all.
The increase would be “the fastest period of growth in company history,” McDonald’s said in a statement.
It may seem like the global market is already saturated with fast food restaurants. But McDonald’s doesn’t see it that way: As humanity changes, the company should too — and add more restaurants, so it can maximize sales in all areas.
“With our current size and scale, some in this room might be questioning whether there is truly more space to grow,” said Manu Steijaert, the company’s global chief customer officer, during Wednesday’s event. “I’m here to tell you we see an incredible opportunity to grow the business by building more locations, getting us even closer to our customers.”
And being physically closer to customers really does matter to McDonald’s. People could get to a McDonald’s more quickly, of course. But it also means the McDonald’s can get to them more quickly, too, with shorter wait and delivery times.
The company has been looking at population forecasts in addition to “a hyper local understanding of customer demands,” to help determine how it should grow, Steijaert said.
Adding 9,000 locations in about three years will mark a sea change in the company’s pace of growth. The first McDonald’s opened in 1940. It took until the early 1970s to get to 10,000 locations, Steijaert said. And it only hit the 40,000 milestone in 2021.
Kempczinski spoke about the company’s need to evolve earlier this year.
“Our footprint reflects what the population looks like probably 20 or 30 years ago,” Kempczinski said of the company’s domestic footprint during an analyst call in July. “There’s a number of places around the US where we are significantly underdeveloped relative to where the population exists today. That opens up for us a whole bunch of development opportunities for us to go after,” he said.
Along with geographical changes, the company is also considering how the very idea of what a McDonald’s is should change as well.
Kempczinski added at the time that the company can now “[think] about small format,” because “of the growth that’s happened with the digital and delivery, where you don’t necessarily need the big dining rooms that you needed in our traditional restaurants.”
Over the summer, McDonald’s said it was testing out a new restaurant concept called “CosMc’s,” named after a little-known McDonald’s character.
As McDonald’s scales up, it’s still planning to stick to its regular formats, Kempczinski told CNN on Wednesday.
“The vast majority of what we’re going to build are going to be our traditional restaurants,” he said, which includes a dining room and a drive-thru, as well as spaces for pickup. “There probably will be some restaurants that are drive-thru and delivery only,” he said, “but that’s going to be the minority.”
More loyalty program users
In addition to the new locations, McDonald’s wants to significantly expand its loyalty program, taking it from 150 million to 250 million 90-day active users by 2027.
Loyalty programs let companies learn more about their customers’ preferences and allow them to offer specific deals that may help prevent them from going to competitors.
Getting people to commit to McDonald’s by joining a loyalty program is as important as expanding geographically, Joe Erlinger, president of McDonald’s USA, said during Wednesday’s investor event.
“Historically, the number of our locations was our competitive advantage at McDonald’s,” Erlinger said Wednesday. “In the future, data will sit alongside restaurant locations as another significant competitive advantage.” Loyalty members visit restaurants more often and spend more than other customers, he noted.
A big part of the app will be about personalization fueled by artificial intelligence, Kempzcinski told CNN. On Wednesday, the company announced a partnership with Google, focusing on artificial intelligence. AI will be used behind the scenes, according to the company, and also to recommend food to customers based on what they like.
More marketing
“Maximizing our marketing remains a meaningful growth opportunity,” said Jill McDonald, who is in charge of wholly-owned international markets, during Wednesday’s event.
Marketing, she said, is driving higher sales at restaurants open at least 13 months.
One example of McDonald’s marketing success: the Grimace shake.
When McDonald’s introduced the shake, it probably didn’t expect the item to go viral on TikTok quite like it did: with TikTokers showing themselves sipping the dessert drink and then, soon after, writhing in mock pain or playing dead. But the mini horror films inspired people to buy shakes (if only to make more videos).
“One of the things that we’ve been hearing from our fans is a curiosity and an excitement about some of these characters that we’ve had in our history,” Kempzcinski told CNN. “When you do it the right way, it quickly becomes part of culture.”
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