“Hipster” McDonald’s key to success

McDonald's AustraliaMcDonald’s, the world’s biggest restaurant chain is suffering a slump in the US market, but a turnaround may be found in the revamped “hipster” Australian operation.

In June, McDonald’s Australia posted 10 consecutive months of positive sales numbers following a year where it rolled out expanded menu offerings and cafe redesigns.

“The business has turned in Australia and the market is focused on sustaining positive performance,” said CEO, Steve Easterbrook, at the company’s second quarterly earnings call this week.

He highlighted the initiatives taken by the Australian team including the roll out of a DIY burger menu service and the relaunch of a loose change value menu and barista quality coffee at its restaurants.

“We are going to learn a lot of how that works,” Easterbrook said on the Australian model.

“And when something works we can then transport it from market to market at pace.”

The Australian McDonald’s business is a bright spot against the dismal US market which has faced three years of slumping sales.

The US market counts for 40 per cent of business but has suffered against competitors like Chipotle and ShakeShack which are viewed as healthier or up market alternatives.

Friday’s 2015 second quarter results showed revenue down 10 per cent to $6.5 billion and the US share price at 97 cents, an improvement on the 88 cents nadir in 2014.
A turnaround plan was announced in May and the Australian strategy has been closely watched.

“What McDonalds has tried to do over the past few years is to take a different approach to the way they’re serving their food,” senior IBISworld industry analyst, Ryan Lin, told AAP.

“They’re presenting themselves differently in experimenting with hipster style cafes and different ingredients used in their burgers to reflect popular tastes in Australia.

While the long lasting effectiveness is still to early to call, the recent resurgence is undeniable says Lin.

“It does appear that they’re very in tune to what customers want and that’s a good sign.”


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