Watch CNBC's full interview with McDonald's CEO Steve Easterbrook

Summary

In a recent conversation, McDonald's executives discussed the progress of their remodeling initiatives, noting a significant uplift in sales and customer satisfaction. The company is focused on innovation, with recent acquisitions aimed at enhancing customer experience through technology. Despite challenges in the labor market and rising commodity prices, McDonald's remains committed to growth, particularly in emerging markets like China. The executives emphasized the importance of agility and risk-taking within the company's culture, resulting in consistent growth over the past several quarters and a strong focus on maintaining competitive pay and employee engagement.

Takeaways

• 😀 The remodeling of restaurants is 60% complete, with significant progress made in the U.S. and globally.
• 📈 Refitted locations see a mid-single digit sales uplift and improved customer satisfaction scores.
• 🏗️ The speed of remodeling is crucial to avoid the older restaurants standing out negatively.
• 🔄 Sales growth now offsets previous losses during construction, contributing positively to overall performance.
• 🚀 The company is focusing on innovation and research to enhance customer experience and drive growth.
• 📊 Dynamic Yield, the company's recent acquisition, has quickly integrated into operations, improving drive-thru efficiency.
• 🛒 AI and machine learning are being used to enhance customer suggestions and streamline restaurant operations.
• 🤝 The company emphasizes collaboration with owner-operators, ensuring their investments align with business growth.
• 🌍 Global labor markets are tightening, prompting the need for competitive pay and better employee engagement.
• 🥗 The company is exploring alternative meat options, while being mindful of operational complexities and customer demand.

Q & A

What is the current status of McDonald's restaurant remodeling?

The remodeling is about 60% complete globally, with approximately 8,500 to 9,000 out of 14,000 U.S. restaurants finished.

How has customer satisfaction changed with the remodeled locations?

Customer satisfaction scores have improved significantly, indicating that customers enjoy the more modern environments and enhanced ordering options.

What impact has the remodeling had on sales?

The remodeling has resulted in a mid-single-digit sales uplift and an increase in guest counts, reversing a previous sales downturn during construction.

What is McDonald's approach to innovation and growth?

McDonald's is focused on identifying growth opportunities through technology and innovation, with recent acquisitions like Dynamic Yield aimed at enhancing the customer experience.

What challenges is McDonald's facing in terms of customer traffic?

Traffic in the quick-service restaurant sector is tight, as consumers are dining out less, largely due to the increase in home delivery options.

How is McDonald's addressing labor market challenges?

McDonald's is working to ensure competitive wages and employee motivation, offering training and educational assistance to reduce turnover.

What are the current trends regarding commodity prices?

Commodity prices are rising, prompting McDonald's to adjust their guidance while managing supply chains to mitigate these impacts.

What is McDonald's strategy for expanding in China?

McDonald's is focused on expanding in China by opening new restaurants and collaborating with strategic partners to penetrate tier 3, 4, and 5 cities.

How has McDonald's performance been in recent quarters?

McDonald's has experienced significant success, achieving 16 consecutive quarters of growth, with a focus on fostering a culture of speed and agility.

What factors contribute to McDonald's competitive advantage in the market?

McDonald's competitive advantage stems from its diversification, local partnerships, and adaptability to geopolitical and market challenges.