McDonald’s Spent $50 Million on TV Advertising in April

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“McDonald’s easily led all companies in TV ad spend last month for the second time in 2019, spending $50 million to promote its new any size $1 soft drink limited time offer, and mix and match 2 for $5 deal to customers.

The Illinois-based chain last topped the list in February when it introduced bacon as a new topping on its signature burgers. McDonald’s was pressed by analysts last week on its first quarter earnings call about when it would also delve into the growing plant-based food trend, which rival Burger King has tapped into with Impossible Foods. CEO Steve Easterbrook said McDonald’s is currently weighing additional complexities of launching its own product, while also assessing the sustainability of the consumer trend.

“Our menu teams are clearly paying close attention to it,” said Easterbrook. “They are discussing this amongst each other and with some of the options that are out there. So maybe more to come, but nothing much to say about it in the moment.”

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McDonald’s Redefines Health In Terms Of Sustainability

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“McDonald’s is moving toward a menu free of artificial colors, flavors and preservatives, but every product has a unique challenge, said Amy Wilcox, director of quality systems and supply chain management for McDonald’s USA. She and her colleague, Cynthia Goody, chief nutritionist for McDonald’s, explained how “clean” ingredients are a key part of the chain’s sustainability initiative during the “Sustainable Approach to the Menu” panel at Restaurant Leadership Conference.

But “we can’t use the clean label description, because everyone has a different definition,” said Wilcox. “We had to create our own definition for suppliers, operators and customers. And that involved a lot of outreach to make sure all our suppliers were on the same page.”

The chain, in fact, announced this past September that is was removing artificial preservatives from its “classic” burger lineup in the U.S. “We have a great group of suppliers,” said Chris Kempczinski, president of McDonald’s U.S., at the time. And now, the chain announced that a third of its eggs are cage-free—and it expects to source 726 million cage-free eggs this year. Right now, chicken nuggets fit the sustainability criteria, as do American cheese and burgers. As far as McDonald’s burger goes, “the pickle presented a problem,” said Wilcox. “We couldn’t find one that fit our definition, so we went forward with what we had and put an asterisk next to it on the menu. Being truthful and transparent is important to us.”

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McDonalds Buys Dynamic Yield For $300 Million to Bring Big Data to Drive-Thru

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“In a testament to the value of personalization, McDonald’s announced plans to acquire an Israel-based startup that uses data to serve up personalized offers to customers. According to people familiar with the matter, McDonald’s will acquire Dynamic Yield for upwards of $300 million.

The acquisition will inject technology into multiple areas of the traditional fast food restaurant, starting with a core feature: the drive-thru. McDonald’s tested the technology in a Miami location, where, according to Wired, the company’s algorithms took real-life factors like weather and traffic into account, suggesting appropriate menu items.

Thanks to new technology, restaurants collect plenty of data. But the practical application of that data is big business, and McDonald’s is seizing that opportunity with the Dynamic Yield buy.

“Upon closing of the acquisition, McDonald’s will begin to roll this technology out in the drive thru at restaurants in the United States in 2019 and then expand the use to other top international markets,” the company said in a statement on the news. “McDonald’s will also begin work to integrate the technology into all of its digital customer experience touchpoints, such as self-order kiosks and McDonald’s global mobile app.”

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McDonald’s Spent $48 Million to Push Bacon in February

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“McDonald’s led all companies in advertising dollars spent at $48 million, less than what the chain allocated in January. Taco Bell (second on the list) cut its TV advertising funding by nearly half, likely due to Grubhub picking up most of the tab for its joint commercial with the chain touting limited time free delivery. Grubhub reportedly spent just under $7 million in ad dollars in February.

The biggest surprise of the month was Arby’s, which catapulted up 26 spots from January to crack the top 10 in advertising dollars spent. The quick service restaurant has completed a large sales turnaround in recent years by relying more on promotions and new deli meats to entice customers, according to Forbes. The chain’s success also led its parent company to acquire both Buffalo Wild Wings and Sonic in 2018.

Overall, quick service restaurants and pizza chains dominated TV advertising again in February, with Yum Brands’ subsidiaries — Taco Bell, Pizza Hut, and KFC — in the top 10 for the fourth consecutive month.  Olive Garden and Applebee’s, the casual restaurants that cracked the top 10 in January, ended February at 11 and 14, respectively, after shelling out more than $10 million each.”

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McDonald’s Is Selling Cheesy Bacon Fries In Certain States

“McDonald’s traditional hot and crispy fries are getting jazzed up with two classic add-ons: Smoked bacon bits, and a gooey drizzle of real cheddar cheese sauce. It’s not quite the gravy-and-cheese-curd-topped poutine of our Canadian neighbors, but if you like your fries with a little something extra, this is your side dish.”

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The Big M loses it’s Size

For the first time since 1977, one of the largest restaurant chains inMcDonalds-Closing the world, McDonald’s, is projected to close more stores than open in the United States. Over the past two years, McDonald’s has been suffering from decreasing revenue and drops in profit from stores worldwide. Increasing numbers of competitors in the United States, economic instability in Europe and strict food safety regulations in Asia have effected the performance of McDonald’s. Already in the first quarter of 2015, McDonald’s closed 350 stores performing poorly in Japan, United States and China hoping it will drive profits upward. McDonald’s CFO Kevin Ozan is implementing turnaround strategies to “win over the millions of burger-eaters.” The company’s approach within limited service fast food is labeled to be outdated and far from trending dietary factors. This generation, the Millennials, are prone to be more health-conscious and interested in key words like “organic, free range, locally grown” which are areas that McDonald’s is incoherent with. With McDonald’s lagging attempt to follow trends, competitors continue to grow like Chipotle which caused the biggest drop in sales to McDonald’s with its entrance into the limited service industry. McDonald’s has not officially disclosed the number of stores closing but it is speculated that a target of 700 restaurants with poor sales will be shutting down this year.

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QSR Chains Seeking New Image

Quick-service chains will be attempting to reinvent a fresher image for the New Year by dropping their reputation of serving ‘junk food.’ The masses have spoken, expressing an aversion to overly processed and reheated foods. Chains such as Taco Bell and McDonald’s will be rethinking their choice of ingredients by removing the amount of artificial preservatives in their foods. Greg Creed, CEO of Yum Brands (owners of Taco Bell, KFC and Pizza Hut) realizes that, “This demand for fresh and real is on the rise.”

Creed stated at an investor and analyst presentation last month that the company should begin to use less preservatives and be more transparent about their use of ingredients. The objective to re-market fast-food into anything other than will be challenging as it has forever been perceived as fattening, cheap and unhealthy. Packaged food and beverage companies have already begun to reformulate their products by removing chemical ingredients. The transformation from junk food to ‘real,’ ‘fresh’ or ‘healthy’ food will be a tricky one. To read a few examples of QSR chains that are making moves towards this challenging recasting of their brands, click here.