Friday, January 29, 2016

Is all-day breakfast the only reason McDonald's had a strong 4th quarter?

In October 2015, McDonald's launched breakfast all day.  Initially there were some concerns that a typical lunch yields more profits than breakfast.  But with the posting of their best quarterly sales in four years it seems like it was a good move.  Still was it the only reason sales were up?  Probably not.

The unusually warm weather in November and December might have played a role. 

But the thing I'm most curious about is the new McDonald's app, downloaded by seven million people since July.  It offers a free McCafe drink after five purchases, a "new offer" every week and exclusive content and coupons.  I'm surprised they weren't already doing this.  It's perfect for their mobile millennial customers. (Forbes, 2016)

Likewise the new value menu introduced earlier this month -- "McPick 2" will probably be appealing as will the new chicken sandwich and Pico Guacamole and Buffalo Bacon burgers. (Jargon, 2016)

On the other hand, I think their core customer is probably less interested in greater transparency about how McDonald's food is made and plans for antibiotic free chicken and cage free eggs.

It will be interesting to see what happens next.

2/3/16 update: I just saw in today's Wall Street Journal  that Chipotle's same store sales were down 14.6% in 4Q 2015 due to the e-coli outbreak, so that could be another significant factor in McDonald's success for the quarter.  BTW, when Taco Bell experienced their e-coli outbreak in 2006, it took them over a year to recover so the effect could linger.

Forbes, T. (2016, January 26)  All-Day Breakfasts Draw A Crowd at McDonald's.  Retrieved January 28, 2016, from

Jargon, J. (2016, January 26)  All-Day Breakfast Fuels McDonald's.  Wall Street Journal.  pB1

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