McDonald’s New Growth Strategy Proves Very Profitable

(Reuters) – 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.

It will also debut a “McPlant” line of plant-based menu items, though it declined to say which suppliers it would use for the faux burger, faux chicken, and breakfast items. It previously tested a vegan “P.L.T.” burger by Beyond Meat Inc in Canada.

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% 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.

By 2022, the chain plans to spend about $2.3 billion on capital expenditure, about half of which will build new stores, with some of the rest used for remodels stalled by the pandemic.

It expects systemwide sales to be in the mid-single digits in 2021, compared to 2019.

Next year, 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 redesign its packaging globally. And soon, it will launch another growth driver that other chains have long had — a loyalty program.

“MyMcDonald’s” digital program will allow customers who sign up to get tailored offers, the company said. A loyalty rewards program using MyMcDonald’s program will start as a pilot in the coming weeks in Phoenix and next year across the United States.

Finally, it will build some locations without any dining rooms to focus on carryout, drive-through, and delivery only.

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% to $5.42 billion in the three months ended Sept. 30, largely recovering from the over 30% plunge posted in the second quarter.

Analysts on average had estimated revenue of $5.40 billion, according to IBES data from Refinitiv.

Net income surged 10% 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.