McDonald’s is planning to overhaul its U.S. menu by adding more customizable options and appealing to regional tastes, a move that the world’s largest fast-food chain says is aimed at reinvigorating its business after another quarter of sinking profits and sagging sales.
“In some of our markets, the reality is that we haven’t been changing at the same rate of their eating-out expectations,” chief executive Don Thompson said on a Tuesday conference call with investors.
Fast food chains have been struggling to compete with fast casual places such as Chipotle that focus on serving fresh, healthy ingredients and allow customers to select their own toppings and ingredients.
McDonald’s has already been experimenting in some restaurants with a “Create Your Taste” program, which lets customers build burgers with toppings and buns to their own specifications. Thompson says this option will be rolled out more widely in the United States next year.
Thompson also said McDonald’s will start allowing local restaurants to serve items from McDonald’s international product pipeline that could play well to regional tastes. So you might see restaurants in one part of the country opt to serve sausage burritos, while others add mozzarella sticks.
But adding these options also contradicts another of McDonald’s stated goals: Making its menu simpler.
Executives say McDonald’s menu has become unwieldy, creating confusion for customers and slowing down workers who cook and prepare the food. Thompson promised Tuesday that the new McDonald’s menu would be “simplified,” with the chain either getting rid of items that don’t sell well or at least making them easier to prepare. But that could be hard to do if the chain is also trying to add regional items and give customers more do-it-yourself options.
McDonald’s is under pressure to turn things around. Profit this last quarter was down 30 percent compared to a year ago. Sales at U.S. stores that have been open for more than year fell 3.3 percent during the same period. The stock was down about a half percent in late morning trading.
The menu shake-up is just one part of McDonald’s turnaround strategy. The company said it will also focus on its digital strategy by making it easier for customers to order, pay and receive coupons on smartphones. It also said it plans to “improve the look, feel and convenience” of McDonald’s, which suggests it might be rethinking the design and branding of its restaurants.
McDonald’s is facing an even wider array of problems across the globe. In Asia, the company saw sales in restaurants open more than a year slide 9.9 percent in the wake of a scandal in which one of its major food suppliers in China was accused of using expired meat and improperly handling food products. The European region’s sales dropped 1.4 percent; it doesn’t help that hundreds of restaurants in Russia are under investigation by Russian authorities, in a move widely viewed as payback for U.S. sanctions.
“The internal factors and external headwinds have proven more formidable than expected and will continue into the fourth quarter, with global comparable sales for October expected to be negative,” said Don Thompson, McDonald’s chief executive, in a statement. “These significant challenges call for equally significant changes in the way we do business.”
The company said that higher tax rates abroad also created drag on its balance sheet this quarter.
McDonald’s is not the only player in the restaurant industry that has recently seen lackluster results. Yum Brands, which owns Pizza Hut, Taco Bell, and KFC, reported earlier this month that its China business was suffering; like McDonald’s, Yum also used the meat supplier there that was accused of improperly handling food. Stateside, Yum is working to turn around its Pizza Hut chain, which has struggled to connect with millennial diners and to offer convenient technology for ordering food at its restaurants.