McDonald’s Corporation (NYSE:MCD) Q3 2023 Earnings Call Transcript

Providing affordable options for our customers has always been core to McDonald’s success, and continuing to evolve these options as customer needs change remains critical. As Chris mentioned a few minutes ago, it’s clear that our customers continue to seek reasonably priced meals as rising costs persist and our markets around the world continue to respond. Germany delivered its highest-ever monthly sales performance by focusing on the evolving needs of our customers amid increasing macro pressures. The market launched a [Your Remix, Your Deal] promotion exclusively in the app allowing customers to build their own small bundles. Beyond affordability, this promotion offered the personalization our customers are looking for and significantly increased customer engagement, which was evident in an additional 1 million 90-day active loyalty members in the third quarter.

This approach of smaller, more affordable bundles featuring our core menu favorites was first highlighted earlier this year in Germany and the U.K. with the launch of new permanent value offerings and has since been adapted locally in other markets. In Canada, a highly competitive breakfast market, the team offered customers a more affordable option with the McMuffin and hot coffee pairing. By simply featuring our core products, at a compelling price point during a critical day part, we drove market share gains in both breakfast and coffee, demonstrating how providing customers, what they want at great value always resonates. The D123 Everyday Value Menu in the U.S. takes a similar approach to affordable bundles with nationally promoted products at locally relevant price points.

The platform features products such as the McDouble or four-piece McNuggets. With a bundle offered at each day part, customers can visit McDonald’s for an affordable meal no matter the time of day. And while prices have evolved over time, the featured products have remained the same, providing customers with their familiar favorites from our core menu. This consistency in our value offerings means customers know exactly what to expect every time they visit us, driving our strong position as the affordability leader in the market. And in China, with slowing macroeconomic conditions and historically low consumer sentiment, the market relaunched a campaign with small price-pointed bundles featuring our hot delicious burgers. Designed to engage our Gen Z consumers, this promotion drove meaningful customer demand and increased beef share in the market.

Beyond the price of our food, we’re continuing to provide customers with new experiences, further elevating their value perceptions. Many markets are using our digital app to drive engagement and increase loyalty participation with our fans, through exclusive activations. This was on display through recent MONOPOLY campaigns in several markets. Starting with Australia where MONOPOLY contributed to record digital sales in the market for the quarter, fueled by higher app registrations and increased game piece redemptions. And in the UK, MONOPOLY returned for the 17th consecutive year, featuring a double-peel option encouraging customers to scan their game pieces into the app. MONOPOLY once again ignited our fans’ love of the brand and delivered higher levels of app engagement than ever before.

Spain had similar success with their MONOPOLY promotion over the summer. Now leveraging the same app features as the U.K., the promotion delivered significant increases in both app downloads and registrations. This is another great example of sharing best bets across our system to fuel our digital growth ambitions. In fact, in our top six markets, digital sales represented more than 40% of system-wide sales, or nearly $9 billion for the third quarter. We now have over 57 million 90-day active members across these top markets, and our relationship with them continues to grow. We’re learning when they visit, how they visit, and what they buy, with more and more of our sales coming through identified channels than ever before. By continuing to elevate the McDonald’s digital experience, our customers feel more connected to the brand, driving those incremental visits that we believe would otherwise go uncaptured.

And it gives us more ways to reunite with customers who haven’t visited us in a while. Beyond MONOPOLY, the brand was at the center of our marketing, yet again this quarter, as we leveraged a One McDonald’s Way approach to celebrating the FIFA Women’s World Cup in July. With record-breaking viewership and fan engagement, our brand was part of a cultural moment, and we continued to elevate our creative excellence through a scalable, culturally relevant campaign. This came to life through global activations across 28 markets, tapping into local fan excitement, and was supported by a fully integrated social, digital streaming and content strategy. Even more exciting, we celebrated our restaurant teams, by sending crew members who go above and beyond to attend the live matches.