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McDonald’s continuing to innovate despite Create Your Taste misfire

Nick Hall

McDonald’s short lived build-your-own burger initiative was discontinued in 2017 after just three years of operation, however franchisees are still bearing the brunt of the brand’s misfire.

The Create Your Taste experiment required franchisees to purchase thousands of dollars’ worth of specialised equipment, which the brand is desperately trying to re-home.

Sharon Paz, McDonald’s Australia Vice President said the equipment would still be available for future initiatives.

“The majority of equipment has been repurposed and it’s likely we’ll find uses for anything remaining for future platforms (or) initiatives,” Paz said.

Gary Mortimer, Marketing Professor at the Queensland University of Technology said the move into the newly established ‘fast-casual’ space impacted franchisee and company-owned store sales.

“What they’ve tried to do with the Create Your Taste menu is capture a new segment of the market, which is always a difficult thing to do,” Mortimer said.

“By offering an option outside of your established menu, you run the risk of cannibalising your sales, in that you double the options without doubling your sales, but that being said there has been an incremental rise in revenue.”

For McDonald’s franchisees, the Create Your Taste menu presented an option that Mortimer believes confused the brand’s key customer base.

“Any business that is considering moving into a new sector needs to stick to their core business strategies,” Mortimer said.

“You go to McDonald’s for a good burger, some fries and shake, not for a gourmet dinner, so the move into this ‘fast-casual’ space adds a lot more complexity to the store, with the potential to slow operations.”

The Create Your Taste menu option was discontinued in Australia a year after the initiative was cancelled in the U.S., following strong franchisee backlash.

Last week, McDonald’s U.S. reported a dip in revenue growth, however the results were a reflection of the brand’s modernisation push, which has seen several company-owned stores move to franchises.

Neil Saunders, Managing Director of GlobalData Retail said the brand’s return to customer-centric storefronts were a contributing factor to softened revenue, however would lead to increased customer satisfaction.

“Although revenue growth has softened over the past year, this quarter’s results still represent a good outcome for McDonald’s and suggest the fast food giant continues to gain ground in the US and beyond,” Saunders said.

“It also signals that as the company laps tougher prior year comparatives, it is still capable of delivering growth. Admittedly, global revenue is down by almost 12%, but this is largely a function of McDonald’s transferring company-owned restaurants into franchises.”

“With around 1,000 restaurants being refurbished each quarter, there has been a positive step change in customer perception, especially among older consumer segments.”

McDonald’s Australia will likely follow suit, with Paz suggesting new customer-focused initiatives have already been slated.

“At Macca’s, all of our innovation is driven by customers. This is not only about the food on our menu, but also giving our customers choice in how they’re served,” Paz said.

“Whether you want to grab a burger on the go from a drive-through, have Maccas delivered to your door, or sit down in a restaurant and have your meal served to your table, we now offer that choice.

“Our app and digital kiosks have been popular with people choosing those options, but customers can also still order at the counter if they would prefer.”