McDonalds 2001 Annual Report Download - page 17

we’re extending our reach
There is more innovation than ever under
The Golden Arches, as we explore
opportunities to extend the ways in
which we serve our customers.
Take, for example, our McCafé
coffee concept. Originally developed
in Australia, McCafés generally are attached to existing
McDonald’s restaurants and have a cosmopolitan
atmosphere with distinct adult appeal. Here, customers
can enjoy premium coffees, cakes and pastries—all at
a value price compared with typical coffeehouses.
Clearly, the coffee market varies significantly by
country, and the demographics need to be right. So,
McCafés may not be appropriate for all our restaurants.
Yet, in the right locations, they can add to the bottom
line. In Australia, where the coffee market is growing at
an annual rate of 10 percent, we have experienced sig-
nificant sales increases with McCafé additions. These
increases are being driven by the sale of McCafé offer-
ings, as well as incremental regular menu sales to our
coffee-loving customers. Today, we operate more than
300 McCafés in over 15 countries, and we will continue
to explore opportunities to add McCafés where they
make sense.
We also want to be top of mind when customers
want an indulgent sweet treat or a snack when they are
on the go. So, we are using dessert kiosks and small
restaurant units to earn such recognition and capture
incremental sales.
For example, McDonald’s currently operates more
than 600 dessert kiosks in Latin America. Initially devel-
oped about 10 years ago in Brazil, where they have been
very successful, these kiosks typically sell bottled water
and a variety of soft serve products, including McFlurry
desserts. Since they are situated in shopping malls near
full McDonald’s restaurants, they serve as billboards
for those restaurants, as well as convenient places for
customers to break to satisfy their sweet tooth.
Now, we are adapting this profit generator for the
U.S. market with McTreat Spot kiosks and are testing
a variety of dessert concepts in southeast Asia.
In the U.S., our McTreat Spot kiosks are situated in
high-traffic, high-volume locations, like the Minneapolis,
Minnesota, airport, the Circus-Circus Casino in Las
Vegas, Nevada, and the Woodfield Shopping Mall in
Schaumburg, Illinois. Offerings include satisfying
sundaes, rich McFlurry desserts, refreshing Fruit ’N
Yogurt Parfaits and delicious triple-thick shakes. Initial
results indicate that McTreat Spot kiosks are attracting
customers who would have gone somewhere else to
satisfy their cravings.
We also have a small test of a concept called
McSnack Spot underway in Texas. It is designed to
capture McDonald’s meal occasions in locations, such
as within retail outlets and train stations, where the sales
potential would not support a
large, traditional restaurant.
McSnack Spots are highly effi-
cient operating units that require
low investments and generate
high profit margins. They offer a
limited selection of McDonald’s
menu items, as well as snack
favorites, such as popcorn and
pretzels. Early results indicate
great consumer acceptance.
Another concept in early test
that is resonating with consumers
is McDonald’s with the Diner
Inside. It brings two great
restaurant experiences together
under one roof with classic,
cooked-to-order diner fare and
traditional McDonald’s favorites.
We opened our first diner in
Kokomo, Indiana, in 2001 and
have several under construction.
Current plans include converting
a number of restaurants in a
television market to McDonald’s
with the Diner Inside in order to
conduct an advertised sales test.
Clearly, we are pursuing
a number of opportunities to
extend the reach of Brand
McDonald’s and are monitoring results to determine
whether a viable business case can be made for prof-
itably expanding each of the concepts in test.
We are committed to ongoing innovation and experi-
mentation. Our intent is to tap into our assets to give
customers what they want, to enhance their experience
and to build the business under The Golden Arches.
THINKING OUTSIDE
THE FRY BOX
We are tapping into the growing
trend for retro-nostalgia with
a concept that combines a
McDonald’s restaurant with a
classic diner experience. The
concept–McDonald’s with the
Diner Inside–is designed to be
best in class in the midscale dining
arena, serving both traditional
diner fare, such as Belgian waffles,
triple decker sandwiches and
chicken fried steak, as well as
Big Mac sandwiches, Chicken
McNuggets and Happy Meals.
During its first year of opera-
tion, the McDonald’s restaurant in
Kokomo, Indiana, which had been
converted to a McDonald’s with
the Diner Inside, saw significant
sales increases.
More than 60% of Americans
snack regularly.
2000 Roper Reports, Roper ASW
15
WHAT DO YOU HAVE A TASTE FOR?