The one-year anniversary of McDonald’s Accelerating the Arches strategy coincides with the arrival of Alistair Macrow as McDonald’s UK new chief executive. MCA considers whether these two changes will herald significant change at the UK business or merely the ongoing progression of its strategy.
This month marks the arrival of a new CEO at McDonald’s UK, Alistair Macrow taking over from Paul Pomeroy as chief executive, almost a year to the day since the global launch of McDonald’s growth strategy called Accelerating the Arches.
The strategy was the company’s response to changing consumer needs caused by the pandemic, as well as being influenced by longer-term trends. In short, Accelerating the Arches is McDonald’s transformation into being more of a digital, technology-focused company.
Macrow is a McDonald’s insider, who first joined the company in 2007. His most recent role was that of global chief marketing officer, where he had responsibility for global menu strategy, brand, insights, family and marketing enablement.
As such, these two events suggest that evolution rather than revolution is the most likely path forward for McDonald’s UK.
However, Macrow’s prolonged contact with McDonald’s global and US colleagues could potentially signify some consequential changes to the UK’s marketing and digital focus going forward.
Already, there has been the announcement that McDonald’s global digital reward scheme, MyMcDonald’s Rewards, will launch in the UK during the first half of 2022. In the US, the loyalty programme launched in July and has “exceeded expectations and is driving increased digital adoption”.
As part of the Q3 results annoucement, Chris Kempczinski, McDonald’s global chief executive, referenced the loyalty programme, saying it “creates another touch point to increase engagement and take our relationship with customers to more responsive, more personalized places. We’re already seeing increased customer satisfaction and higher frequency among digital customers compared to non-digital”.
In addition, promotional food campaigns in the UK may evolve. McDonald’s Famous Orders campaign, which has been a big success in the US, has so far not launched in the UK. The Famous Orders campaign, based around celebrities, centres on the idea that “no matter how famous you are, everyone has a go-to McDonald’s order”. An example is McDonald’s successful collaboration with Korean pop band BTS. A BTS themed limited time meal was launched in 49 global markets during 2021.
It is clear that, not only in the UK, but also globally, McDonald’s growth strategy will remain firmly in place. So far this year, McDonald’s shares are up 14%, an indication potentially that many believe the brand is thriving under the 12-month-old strategy and has done more than just survive the pandemic.
The strategy was referred to several times during McDonald’s recent third quarter earnings call, which gave hints how parts of the strategy may evolve as it moves with the times.
Focusing on three growth pillars, the plan aims to maximise marketing, drive its core menu and to outperform on the three Ds of delivery, drive-thru, and digital.
The company’s strong UK growth during the third quarter was referred to by management as being driven by growth in delivery and digital. For its leading international markets including the UK, 20% of sales comes through digital channels, such as its app, kiosks or delivery.
The burger brand continues to focus on the expansion and improvement of its drive thru estate. It has approximately 1,000 in its UK & Ireland estate currently, and plans to open up to 300 more in the next ten years.
In the US - home of the drive thru - McDonald’s has been testing automated drive thru order taking in collaboration with IBM. Accuracy is reported to be around the 85% mark, with the likely intention that this innovation will start to appear in drive thrus in the UK soon as a way of improving speed of service, order accuracy and help keep staff costs under control.
There has also been mention by Kempczinski of kitchen automation, which would potentially further reduce the need for staff. In June, he said: “Could we do automated fryers, could you do automated grills. I mean let’s push the envelope on how you can go with automation.”
For now, the widespread adoption of kitchen automation remains up to five years in the future.
Just as well, if one considers McDonald’s UK recent pledge - as part of the fast-food chain’s recently launched sustainability strategy called ‘Plan for Change’ - to help one million people gain new skills and open the door to jobs by 2030, in addition to the introduction a youth worker into every restaurant by 2024 and 3,000 apprentices by 2025.
