McDonald’s Corp. executives said Wednesday they will cut eight items from its menu in January as part of a broader effort to overhaul its service model to meet the needs of different type of customers.
In an informal discussion with Wall Street analysts, chief executive Don Thompson and McDonald’s USA president Mike Andres described a radically different service model that uses a combination of mobile and Web ordering and customization.
Executives also suggested that they will focus on improving the quality of food the quick-service burger chain offers by analyzing the ingredients in every item and focusing on the “authenticity” of its food.
“We must and will win with food,” Andres said.
Executives also said that the company’s customization platform, Create Your Taste, which it plans to offer in 2,000 units next year, is a major part of its plans.
“Create Your Taste is not a test,” Thompson said. “It’s a rolling implementation now.”
The chain is working to turn around its U.S. business. Same-store sales have fallen 2.3 percent this year, and they declined 4.6 percent in November.
In addition to cutting eight menu items, the chain will also reduce the number of Extra Value Meals it offers. Executives would not comment on which eight items and which Extra Value Meals are slated to be cut. Executives acknowledged that eight items is not many, considering the total number of items on McDonald’s menu, which has more than 100 offerings. Even executives could not definitively say how many items the chain sells.
Andres said the items that are cut will make operations easier.
“It’s not significant in terms of percentage,” Andres said. “It is significant in terms of the impact on the back of the line.”
Early tests did not result in lower sales, Andres said, suggesting that the items cut were “probably lower sellers.” He also indicated that more cuts could be forthcoming.
Andres said 80 percent of the chain’s sales are from “a very small subset of menu items.”
Executives also said the cuts would leave room for different regions to offer products that sell better in their local markets.
While executives acknowledged that they still need new menu news, in the future that would come through the Create Your Taste platform.
“We don’t need to have a big menu board to offer variety,” Andres said. “The variety is determined by the customers themselves.”
Thompson and Andres suggested that McDonald’s total service model would undergo a comprehensive change, giving customers different methods of ordering.
By reducing the menu, executives hope to reduce customer confusion and increase speed for some orders, particularly through the drive thru.
“The drive thru is about speed,” Thompson said. “You want to make sure it is delivered quickly so you’ll be on your way. You don’t get out of your car for a reason.”
But they also said they could use other ordering options, including mobile ordering and payment, as well as touchscreen kiosks that provide different methods for customers to order their food based on their immediate needs.
Customers who want to come inside, get their food and leave quickly will be able to use mobile or Web ordering to speed that process. And customers who want a better experience can order customized burgers through Create Your Taste.
“This is not exit, stage left,” Thompson said. “This is a balance between core classics and offering new menu items.”
He also said the customization strategy may help “reassert McDonald’s burger leadership.”
“Customers have expectations of eating out, and they have expectations of McDonald’s,” Thompson said. “Those aren’t always the same thing.”
Executives said they will work to once again become the top destination for families — a designation the chain lost this year amid intense competition from Atlanta-based chicken chain Chick-fil-A.
McDonald’s has already taken a big step in that direction by planning to include Cuties California clementines as a seasonal option in Happy Meals. In the days after that announcement, Twitter sentiment on the idea was 100-percent positive, Thompson said.
“That never happens,” he said.
Contact Jonathan Maze at [email protected].
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