McDonald's reported quarterly results on Monday.Gene J. Puskar/The Associated Press
McDonald’s Corp said on Monday it would test a loyalty program for customers and launch a new crispy chicken sandwich next year as it refocuses its long-term strategy to look beyond the COVID-19 pandemic.
The world’s biggest burger chain beat revenue and profit estimates for the third quarter on Monday as customers in the United States ordered more hamburgers and fries in drive-through outlets and on delivery apps to avoid dining out during the pandemic.
Overall, global sales fell 2.2 per cent in the quarter, an improvement over the previous quarter’s drop, as McDonald’s had already announced in an October update.
The company’s limited-time promotional deal with rapper Travis Scott, which caused shortages of some ingredients, and other marketing investments also helped sales bounce back from pandemic lows.
Shares were last 2.3 per cent higher amid broader market gains.
McDonald’s plans next year to prioritize marketing, including new packaging globally with a “modern, refreshing feel and playful touches to unify branding” it said in a statement.
McDonald’s will focus on core products such as burgers, coffee and chicken, including a new Crispy Chicken Sandwich - something some franchisees have long sought in order to compete with the success of similar products at Popeyes, a unit of Restaurant Brands International Inc, and Chick-fil-A.
It will also soon include another growth driver that other chains have long had: loyalty programs.
“MyMcDonald’s” digital program will allow customers who sign up to get tailored offers, the company said. A loyalty rewards program using the MyMcDonald’s program will start as a pilot in coming weeks in Phoenix and next year across the United States.
Despite some sales recovery and better-than-forecast margins, the company is still pressured in key markets outside the United States, including France, Germany and Britain by new lockdown restrictions due to a spike in coronavirus cases.
McDonald’s total revenue fell about 2 per cent to $5.42 billion in the three months ended Sept. 30, largely recovering from the over 30 per cent plunge posted in the second quarter.
Analysts on average had estimated revenue of $5.40 billion, according to IBES data from Refinitiv.
U.S. customer traffic still remained down from a year earlier, the company said.
Net income surged 10 per cent to $1.76 billion, helped by gains from the sale of a part of McDonald’s stake in its Japanese affiliate.
Excluding those gains, the company earned $2.22 per share, beating estimates of $1.90.
Ushering in the plant-based market
McDonald’s Corp decided to debut its own plant-based meat alternatives line called “McPlant” in 2021, including a patty that Beyond Meat subsequently said it helped co-create.
“Beyond Meat and McDonald’s co-created the plant-based patty which will be available as part of their McPlant platform,” a Beyond Meat spokesperson said in an e-mail.
After McDonald’s announced its McPlant line earlier in the day, shares of plant-based meat maker Beyond Meat fell 8%.
Beyond Meat was the front runner for a contract as it had conducted tests of a so-called “P.L.T.” burger at nearly 100 McDonald’s locations in Ontario, Canada, earlier this year.
McDonald’s reported market-beating profit and revenue for the third quarter on Monday.
“Plant-based products are an ongoing consumer trend. It’s not a matter of if McDonald’s will get into plant-based, it’s a matter of when,” McDonald’s Chief Executive Officer Chris Kempczinski said on a call with analysts.
Analysts, rival fast food companies and plant-based protein producers have been closely watching McDonald’s plans as it is one of the few national chains yet to sell plant-based meat burgers on a permanent basis.
While other chains have started offering plant-based meat options, including Restaurant Brands International Inc’s Burger King, White Castle and Dunkin' Brands Group Inc., a McDonald’s contract could be the biggest and would put the plant-based meat movement front and center in mainstream America.
McDonald’s said under its McPlant line, it could offer products including burgers, chicken substitutes and breakfast sandwiches, which it expects to test in some markets in 2021.
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