74 / ENTREPRENEUR.COM / January-February 2018
because it was a logistical
headache. But the chain
kept tweaking, investing in
new kitchen equipment that
would allow franchisees to
cook all breakfast items—plus
the regular menu items—
simultaneously. Helped by
all-day breakfast, McDonald’s
saw four straight quarters
of same-store sales growth
in the U.S. “We had gotten a
little too focused on serving
stuff that works for us,”
says Kempczinski. “All-day
breakfast was the first real
thing where we said, ‘This
is something the customer
wants, and even though
it’s going to create some
complexity in the kitchen, we
have to figure it out.’ ”
Another example of past
mistakes corrected: Despite
being known for its value,
McDonald’s had nixed its
Dollar Menu in 2013 because
franchisees found it hard to
profit off the items. Their
hope at the time was to
punch up at pricier competi-
tors like Chipotle and Panera.
Customers balked; they saw
McDonald’s as a place for
deals, and rather than spend
more, they moved on to
competitors like Wendy’s,
with its four-for-$4 offer.
So in 2017, McDonald’s
introduced its mix of value
items, from its McPick 2
offerings—two-for-$2 and
two-for-$5 deals that included
favorites such as fries and
nuggets—to $1 coffees and
sodas. This struck a balance
of sorts: Customers could
dine without splurging, and
franchisees weren’t stuck
with razor-thin margins. The
company kicked off 2018 with
new Dollar Menu products for
$1, $2, and $3.
McDonald’s is still looking
for ways to reconcile low
prices with a rising customer
desire for quality (or at least
an intensifying disinclination
toward harmful ingredients).
In March 2017, it said it would
start making certain sand-
wiches, including the Quarter
Pounder, with fresh beef to
order—and would roll that out
to most U.S. restaurants by
- In response to concerns
about antibiotic resistance, it
also said it would eliminate
the use of chicken exposed to
certain antibiotics in the U.S.,
Brazil, Canada, Japan, South
Korea, and Europe, with the
goal of eliminating them from
all stores by 2027.
“The majority of reasonable
folks,” says Easterbrook, “will
always feel warm toward an
individual or company looking
to improve itself.”
THE LAST PIECE of McDonald’s
puzzle is technology. In the
past year, it has rolled out
app-based delivery to 10,000
restaurants in 20 countries
to boost its sizable delivery
business. Asia and the Middle
East alone logged nearly $1
billion in deliveries. The tech
makeover also includes out-
door and indoor digital menu
boards, and ordering kiosks.
These changes have gotten
mixed receptions. Organi-
zations like the National
Restaurant Association say
most consumers embrace
tech in their dining endeav-
ors, but the pricey remodel-
ing efforts have upset some
franchisees. So, too, has the
introduction of customized
products like made-to-order
McCafé drinks. In a 2017 sur-
vey of McDonald’s operators
released in October by analyst
firm Nomura, 27 franchisees
who collectively own 241
stores rated their relation-
ship with McDonald’s HQ at
less than 2 out of a possible
5 points, complaining of
“forced equipment purchases”
and “slow ordering time, slow
make time, and therefore
slow service time.”
Kempczinski sees fran-
chisee frustration as part of
the deal when things change.
“We’ve been very clear with
them about where we’re going
and what our expectations
are around performance and
investment,” he says. “What
we’ve said since day one is
‘There will be parts of the
plan you may not like. But
are there enough that you’re
really excited about that you
can sign off on it in totality?’”
This isn’t the only issue
McDonald’s must contend
with. It’s also facing ongoing
battles over worker wages,
and whether it should be held
responsible for what franchi-
sees pay employees—sticky
legal, financial, and social
issues that may continue for
years to come.
Still, if McDonald’s track
record is any guide, it will
evolve accordingly and close
rifts with franchisees enough
to boost its bottom line. After
all, franchisees also raised
concerns about all-day break-
fast—which started McDon-
ald’s toward its recovery.
Easterbrook, unsurpris-
ingly, remains confident. “The
beauty of getting momentum
is that we now have an oppor-
tunity to look further out at
future innovation,” he says.
“And we’re restless to find
more.” —J.J. MCCORVEY