McDonald’s Scrambles to Adapt to New Consumer Tastes

For years, McDonald’s Corporation has been one of the world’s largest fast food chains by sales volume and revenue. As of early 2022, McDonald’s had more than 39,200 restaurants in 119 countries and was serving tens of millions of customers per day.

Many companies simplified their menus and decreased average times to complete drive-through orders. New building design concepts include smaller restaurants, with some planned to offer drive-through service only, such as at some Wendy’s. Burger King unveiled a new design that is 60% smaller than its traditional restaurants. Customers may order through the BK app and have their food delivered to dedicated parking spaces or to pick-up lockers for mobile and delivery orders. Most fast food restaurants offer similar apps and services.

Drive-through service is booming, especially at Chick-fil-A where lines often snake around city blocks creating traffic snarls. The problem got so bad at one location in Charlotte, North Carolina in early 2023 that city officials ordered the franchise to shut down and build a streamlined drive-through only building. Many Chick-fil-A’s feature double drive-through lines staffed with uniformed runners who take orders on a digital tablet and then deliver filled orders to waiting vehicles. As of October 2022, the chain had more than 30 drive-through only locations in the U.S. The company reports that most of its locations average about $8.1 billion in annual sales-a highly enviable level of revenues. This U.S.-based firm plans to expand into Europe and Asia by 2026, with a presence in five international markets by 2030.

Consumer tastes are changing, especially among younger demographic groups which are trending toward healthier or fresher foods. McDonald’s has made efforts to add healthier items to its menus (such as salads, apple slices and oatmeal) and has had success with its gourmet coffee items. In 2018, it banned foam packaging from its worldwide supply chain and announced it would use only fiber-based packaging made from recycled sources by 2025.

The company is implementing new digital self-service ordering stations, with orders delivered to restaurant tables by McDonald’s staff (traditional counter service continues to be available). This is part of the firm’s push to incorporate more technology in its restaurants. In 2019 alone, McDonald’s spent almost $1 billion to upgrade 2,000 U.S. locations with self-service kiosks and digital menu boards. It also created McD Tech Labs in Silicon Valley, California where engineers and tech scientists study innovation in food service. The company acquired Apprente, a California startup that developed voice-based platforms for placing orders; and Dynamic Yield, a technology firm with expertise in personalization and decision logic. The acquisitions enabled McDonald’s to improve its drive-through experience by personalizing menus based on factors such as weather and restaurant traffic.

Many innovations to McDonald’s menu and operations begin in its overseas locations. Baguette-style sandwich rolls used in French and Italian McDonald’s have been promoted in the U.S. Packaging that touts the company’s quality ingredients are standard in Europe and later became so in the U.S. The company has had success by tailoring its menu to suit local tastes.

The company and many of its franchisees have spent generously on remodeling existing locations, both in America and around the world. In 2018, a 19,000 square-foot LEED certified glass and steel location opened in Chicago, Illinois complete with a floating glass garden and a living wall. Meanwhile, rising wages will put intense pressure on McDonald’s to increase efficiencies within the restaurants, reduce complexity and consider automation. Such automation could be easiest to implement in the form of computerized ordering, with consumers entering their own orders on a tablet or kiosk. The firm has been testing robotic deep fryers as well as voice-activated drive throughs in an effort to shorten customer wait time.

Wendy’s Co. and Burger King have been jockeying for the number one and two spots on the list of top hamburger chains in the U.S. based on sales volume. More than half of Wendy’s company-owned locations have been remodeled with leather chairs, metallic highlights and flat-screen TVs. Wendy’s is also offering a modestly priced value combination which includes a choice of hamburger, four-piece chicken nuggets, small fries and a drink. Burger King and McDonald’s quickly responded with their own bundled value deals.

McDonald’s is not alone in its struggle to change consumer perceptions. Most fast food chains are working to remove or limit preservatives in addition to using antibiotic-free and added hormone-free chicken and beef.

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