McD’s replaces its US head after value deals flop

McDonald’s earnings last quarter were like a carton of soggy fries for investors, as it struggled to woo lower-income Americans with bargains. The company reported yesterday that its US same-store sales grew 0.8% in Q2, down from 3.9% in Q1 and lower than the 1.06% analysts expected.

The Golden Arches blamed the stateside growth slowdown on the poor execution of sound strategy, and announced yesterday that it’s replacing its longtime US business head Joe Erlinger with its COO Skye Anderson.

It’s the chef, not the ingredients

The chain was banking on World Cup and KPop Demon Hunters meal discounts, as well as an updated under-$3 menu to juice sales. But:

• McD’s now says it launched too many promotions at once, straining restaurants and driving up customer wait times.
• Many franchisees didn’t offer the under-$3 menu. Some actually raised prices. Meanwhile, the chain nixed certain in-app promotions and its popular Buy One, Get One for $1 deal.

Foot traffic fell last quarter—though customers spent more on average, partially due to a new specialty drinks lineup.

To turn things around…McDonald’s says it’s bringing back more in-app deals and refocusing on marketing time-tested promotions like Extra Value Meals. It’s also working to upgrade its menu and revamp store designs.—SK