A new president takes over at McDonald’s, and the need to build transaction size in new ways is clear.
Upselling that happens at fast-food restaurants drives the purchase of a bigger burger, an extra taco or two, a tempting side dish, a topping or a tastier beverage. Small increments in transaction size do scale fast with so many purchases each week.
As McDonald’s turns its presidential seat over to company long-termer Jeff Stratton this Saturday, The Lempert Report thinks upselling could help reverse the chain’s growth slowdown that occurred in 2012. The launch of new, promotable, innovative products would help upsell efforts be more productive.
Yet until that happens, a standby strategy (as at other chains) is to lure customers with low-ticket offers such as the Dollar Menu—which don’t quite offer the same protein quantities they used to or completely satisfy appetites the same way. (After all, ingredient costs continue to rise.) Though many consumers feel a nominal consequence of spending an extra buck or two over a basic Dollar Menu offer, this upsell strategy often affects the people who can least afford it.
Which is why we urge McDonald’s and competing fast-feeders to show compassion to those continuing to struggle with the slow recession recovery and, depending on where they live, natural disasters such as superstorm Sandy. We’d like to see fast-feeders balance their need to upsell with a way of not leaving vulnerable consumers behind. By doing so, they could differentiate in local areas with specific incentives to buy more or even offers of employment.
A key to upselling, we believe, is in how artful the chains can get—well beyond the ubiquitous, “would you like fries with that?” A rote phrase like this becomes easy to dismiss. It will take more connectedness to consumers, especially in areas where fast-feeders are more convenient than supermarkets, to upsell effectively.
For Mr. Stratton, who began as a store’s crew member more than 40 years ago, it could help if he keeps in mind the difference of eating in a McDonald’s by choice or necessity, and extends offers to customers accordingly.