McDonald’s: Our brand strength is closely linked to the health of the business

McDonald’s CEO has reiterated the importance of a strong brand in driving strong financial results at the business, as the company details its strategy to “become faster, more innovative, and more efficient”.

The company’s CEO Chris Kempczinski hailed the impact of the brand’s “world-class marketing engine” to investors today (25 April) after announcing results for the first quarter of its financial year.

He highlighted that it had topped WARC’s ‘Effective 100’, a list of the world’s most celebrated companies for marketing communications, for the fourth year running and linked the strength of the brand, which, he added “is more than just the food [it] serves” directly to its financial success.

“As goes our brand so goes the economic health of the company,” he said.

The fast-food chain delivered a like for like volume sales increase of 12.6% in the three months to 31 March. Operating income increased 10% to $2.5bn (£2bn).

While Kempczinski said he was “pleased” with McDonald’s brand strength “there is more opportunity ahead”, particularly as the company introduces the next stage of a strategy to strengthen the organisation.

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In January, the company announced it was launching “Accelerating the Arches 2.0”, the latest phase of its long-term plan to bolster the strength of its marketing, core products and delivery, and today unveiled details of the latest phase, “Accelerating the organisation”.

“The second newer element of our strategy is fundamentally rethinking how we as a company can work better together to become faster, more innovative, and more efficient,” Kempczinski stated.

There are three elements to this plan, the first is implementing horizontal working to remove silos in the organisation, the second is adopting “one McDonald’s way” to standardise working practices and make problem-solving more efficient, and the third is strategic investments to digitise the organisation.

For marketing teams at McDonald’s, this new stage of the strategy means working across markets collaboratively and sharing ideas that work well.

On the same call to investors, chief financial officer Ian Borden gave the example of the “Raise Your Arches” campaign, which was initially rolled out in the UK. After this campaign proved massively popular among the brand’s customers, it quickly scaled it to 30 markets across the globe. This is an example of the “one McDonald’s way” principle, Borden said, as it shows how a singular idea can drive impact in multiple markets for the brand.

Digital sales continued to grow during the quarter, these now represent 40% of systemwide sales in McDonald’s top six markets, and represented $7.5bn (£6.04bn) of sales in the quarter.

Borden predicted that digital as a percentage of sales would continue to grow, stating the company was only in the “early days” of developing initiatives like the app.

As the company’s digital presence develops and it will be able to get much more “specific” and personalised with what it offers through the like of the app, he said. He suggested the company may in the future be able to deliver personalised offers to drive frequency of sales or reach.

“We’re laying a foundation for a very intimate, close connection… I think it’s going to allow us to get much more sophisticated about how and when we’re delivering value,” he said.