McDonald’s Upgrading its Guest Sweets

McDonald's Upgrading

McDonald’s upgrading its guest sweets

Transformation under way for restaurants to become ‘dessert destinations’
November 13, 2011|By Emily Bryson York, Chicago Tribune reporter

Shannon Stevens, of Chicago, is busy polishing off a hot fudge sundae at a downtown McDonald’s, the cap to a meal of McDouble cheeseburgers.

The 20-year-old is something of a regular, visiting the fast-food giant about twice a week, but the desserts aren’t the major draw.

“I like the chocolate sundaes and the shakes,” he said, but noting that McDonald’s needs to add more chocolate items if it wants to lure him from a traditional favorite like Dunkin’ Donuts or Dairy Queen when he’s craving something sweet.

Turns out, McDonald’s is thinking along similar lines.

With restaurants that already circle the globe, the fast-food giant has embraced myriad strategies to keep sales growing, extending its restaurant hours and adding healthier items as well as upscale coffee drinks. Now, the world’s largest restaurant chain by sales is aiming to transform itself into a “dessert destination,” moving beyond apple pies and shakes in an effort to plump up sales in a relatively small segment of its business.

“It’s just one of those things that fell into our laps as something customers want,” said Adam Salgado, marketing director with McDonald’s USA.

“We’re always trying to find ways to address what customers want and, in turn, help us grow our business,” he said, describing the latest push as “renewed focus in offering variety.”

McDonald’s is also working to reflect different eating patterns.

Ten years ago, Salgado said, customers might only have had a McFlurry — an ice cream and candy concoction — with dinner, but now they’re having them with lunch and at other times of the day. For instance, McDonald’s sells 20 percent of its pies at breakfast.

McDonald’s, Salgado said, first got a taste of what a smaller, novel dessert could do for sales last summer, when the chain offered a “snack-size” McFlurry with Reese’s cups, tied to a movie promotion for “Shrek Forever After.” He declined to provide specific sales data.

But results were promising enough for the Oak Brook-based burger chain to repackage its shakes in clear cups, adding whipped cream and a cherry, and introduce a small-size shake, at 12 ounces, for the first time earlier this year.

Now it’s testing new iterations of its best-selling dessert: pies, first introduced in 1970. The chain recently tested a strawberry creme pie, with a sugar cookie crust and sugar glaze covering strawberry and white cream fillings, and a S’More pie, side-by-side layers of chocolate and marshmallow with a graham cracker crust.

“That sounds perfect,” Stevens said of the S’More pie. “I can’t wait now.”

Salgado said McDonald’s is evaluating when either would make sense as a limited-time offering, and the chain said it’s too soon to say how they might be priced. McDonald’s also is testing a chocolate-dipped cone.

“These are just some examples of things we’re looking at,” Salgado said, adding that the products under consideration would not require new equipment.

Salgado said the majority of dessert sales are made as add-ons — that’s restaurant lingo for accompaniments to a traditional meal — but that the chain is looking for new items to help drive traffic on their own merits.

The timing seems to be right. Sweet treats have gained ground with consumers during the recession, with Technomic estimating that 70 percent of consumers ate dessert at least once a week during 2010. That’s up from 57 percent in 2007.

“Most people, when the economy is tough, turn to desserts as comfort food and an indulgent way of getting past a tough day or a tough life,” said Darren Tristano, executive vice president at Technomic.

Daniel Dahlen, chief development officer at Weber Associates, said that desserts are a relatively small business for McDonald’s but new menu options are more likely prompted by pressure to keep the business moving forward.

“When you’re McDonald’s, you’ve got to look under every rock,” he said. “They need to increase sales every month over month, quarter over quarter.”

On Tuesday, McDonald’s posted its 102nd consecutive month of sales gains at stores open more than one year, a critical industry benchmark. That equates to 34 consecutive quarters of gains.

“In last few years, McDonald’s has been doing very well in drawing people to restaurants and drive-thrus at nonpeak hours with snack wraps, beverages,” said Janney analyst Mark Kalinowski, who estimated that desserts comprise a low-single-digit percentage of the chain’s business. “So it sounds like McDonald’s is saying, ‘Hey it’s a great way to leverage fixed costs and get more people in our stores at nonpeak hours.'”

Although products like snack wraps, oatmeal and smoothies are also important offerings for these periods, Tristano said desserts are “craveable” and perhaps an easier sell for a group of office workers battling midafternoon doldrums or a few friends looking for a way to cap off a night on the town.

View the full article on Chicago Tribune

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