McDonald’s Looking a Customer Ahead and Sharing some Success Clues

 

Success does leave clues and McDonald’s has picked up a lot of clues over the years and according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® from time to time they share some of the clues will all of us.  When they do it’s important that you take note of what they are saying.   This is one of those times.

Fast-food behemoth McDonald's is making a strategic shift towards digital marketing, with plans to invest hundreds of millions of dollars in digital innovation. This includes new ordering channels, personalization, and loyalty programs. The move underscores the growing importance of digital marketing in the food industry, particularly for chain restaurants. 

1.   McDonald's is creating a digital marketing fund in the U.S., which will account for 1.2% of franchisees' digital revenues starting in 2025. This fund will be financed through existing marketing contributions from franchisees. 

2.  The company anticipates that this reallocation of contributions will enhance a typical store's cash flow by approximately $2,600 per year. 

3.  The strategy involves diverting funds from lower ROI marketing initiatives to digital marketing. The specifics of these shifts will be determined in collaboration with franchisees. 

4.  McDonald's Global Chief Marketing Officer, Morgan Flatley, stated that the company has already started to balance traditional mass media spend with investment in digital marketing capabilities. 

5. McDonald's digital sales have been instrumental in driving overall sales growth in recent quarters. The company's loyalty program has amassed 150 million active users globally and 34 million in the U.S., surpassing Starbucks. 

6.   Future investments will focus on new ordering channels, including web-based ordering without app downloads, personalized order recommendations, and next-generation loyalty features. 

7.  In 2025, McDonald's will shift funding for its digital marketing tools, such as its mobile app and customer relationship management system, into its digital marketing fund. This approach will initially be adopted in five global markets: the U.S., Australia, Canada, Germany, and the U.K. 

8.  Tariq Hassan, McDonald's U.S. Chief Marketing and Customer Experience Officer, and Whitney McGinnis, U.S. Chief Information Officer, emphasized the need to modernize the company's marketing model to personalize customer interactions. 

9. They also stated that the company will collaborate with franchisee leadership to incorporate digital marketing costs into the marketing budget and align this change with McDonald's 2025 plans in the U.S. 

10.  They believe this funding model will enhance understanding of consumer behavior, optimize customer lifetime value, and maintain systems for data management, network security, and data storage. 

This shift towards digital marketing underscores the critical role of digital innovation in the food industry. It highlights the need for chain restaurants to allocate separate funds and campaigns for digital marketing, ensuring they stay competitive in the evolving market landscape. 

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information. 

Target Getting Fresh for 2 Million New Customers

Success does leave clues and Target is getting fresher faster by listening to it new first time digital drive-up customers.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® “Target is giving customers more of what they want, when they want it”

Regular readers of this blog know that consumers increasingly want more grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food. So, get this, more than 5 million customers shopped on Target.com for the first time during the first quarter, including over 2 million first-timers for Drive Up service.

Consumers are dynamic not static according to Johnson and Target Corp. is evolving faster making fresh and frozen food available through its in-store Order Pickup and curbside Drive Up online grocery services. Giving consumers what they want when they want it.

Digital sales are working at Target  as sales in Q1  were up 141%.  The move adding fresh and fresh frozen into the mix, adds another 750 produce, dairy, bakery, meat and frozen items to the product selection for in-store and curbside pickup, according to Target.

The company noted that the expansion now enables online customers to order key perishables — such as milk, bread, eggs and ice cream — along with grocery staples already available through Drive Up and Order Pickup. Ok, so regular readers of this blog say why did it take them so long.  Who cares, they are beginning to get it now. 

Target Chief Operating Officer John Mulligan, stated, “The speed and convenience of our fulfillment options are unmatched across the country, and they’ve become even more critical for our guests searching for easy and safe ways to shop during the pandemic,”  “By adding fresh grocery to the pickup services our guests already love, we’re giving them even more reasons to shop at Target.”

More than 5 million customers shopped on Target.com for the first time during the first quarter, including over 2 million first-timers for Drive Up service. When you get new customers are you giving them what they want?  Consumers are dynamic not static.  Are you evolving with your consumers?

Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

Grocer’s Relevance Continue to Decline

When a key food sector funded research project study shows a continued decline in key demographic customer loyalty one thing is obvious.  That is, usually things are much worse that then report found according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

So, currently supermarkets remain the go-to retail venue for fresh produce, but their pull is weaker among younger shoppers, according to the Food Marketing Institute’s 2019 “The Power of Produce” study. What other avenues of distribution are consumers migrating? Well, according to Johnson grocerant niche restaurants, dollar stores, and grocerant niche convenience stores.

Shockingly the report found that only 50% of all shoppers cited a full-service supermarket as their primary store for purchasing fresh produce. Wow, have things changed since I was a kid.  All that said FMI’s report gives traditional grocery stores a leg up on other retail formats, given that 55% of grocery trips include fresh produce. Ok, you know what I’ am going to say now.  We told you so! Yes, Grocerant niche fresh food sales continue to drive customer migration.

Here is where the FMI study edified what we have been saying for 1 years.  They found that the younger generation exhibits a greater affinity for buying fresh fruit and/or vegetables at supercenters and alternative retail channels, including online, dollar stores, convenience stores and farmers’ markets. Of consumers polled, just 34% of older Millennials named a supermarket as their primary store for produce.

 Rick Stein, vice president of fresh foods at FMI, said in a statement. “Specifically, the study suggests a need for a renewed focus on strategies for continued growth, including organic, locally grown produce; value-added produce for time-starved customers; produce-based beverages and private branded produce.” What he meant to say is you DONING WHAT YOU HAVE ALWAYS DONE AND DOING THE SAME WAY WILL NO LONGER WORK.

Here is some information from the study all food retailers will find useful.

1.        “Fresh fruit and vegetables also show potential to fit into more eating occasions. Although 36% of consumers polled said they eat fresh produce about three times a week or less, they would like to include it more frequently in meals or snacks, FMI found.

2.       56% of shoppers buy veggie shakes or fruit smoothies, and 53% buy cold-press juices. Those figures don’t include similar beverages people make at home or purchase from other areas of the store, such as kombucha.

Are you offering more fresh fruit and produce to your consumers as a Hand-Held Food for immediate consumption options?  If not Why?  Foodservice Solutions® specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant Niche.