Posted on: Saturday, June 18, 2005
McDonald's targeting young adults
By Dave Carpenter
Associated Press
OAK BROOK, Ill. — Just outside its wooded headquarters campus, McDonald's Corp. is offering sneak previews of its fast-food future.
M. Spencer Green • Associated Press Coming soon: Other menu items and concepts not yet released to a general audience.
Don't expect Starbucks-like makeovers like this one at the 13,600 U.S. McDonald's, or 30,000-plus worldwide; the Oak Brook restaurant, which opened late last month, doubles as public restaurant and test site. But the world's largest restaurant chain is tinkering with various possibilities in technology and design to try to ensure it is a hangout of choice in the future.
"It's unlikely you'll see this exact restaurant replicated," McDonald's spokesman Bill Whitman said. "But you will see elements of this restaurant in some of our new construction. It's all about keeping our restaurants more relevant for our customers."
McDonald's has undergone an image change in more ways than one since a time 2 1/2 years ago when its sales and reputation were sagging amid complaints about its service and food. Despite inconsistent results in some large European countries, that McSlump is no longer: Same-store sales have increased for 25 straight months in the key U.S. market.
The company reported that first-quarter operating income was up 6 percent to $910 million and revenue rose 9 percent to $4.8 billion over the same time last year. Its stock price nearly tripled over a two-year period, reaching a four-year high of $34.56 per share in March, but has since settled around $29.
Snazzier new restaurants are part of the makeover; about 1,000 mostly older U.S. McDonald's have been either renovated or rebuilt since 2002. Contributing more to the sales resurgence, though, have been longer hours, accepting credit and debit cards, the high-powered "I'm lovin' it" marketing campaign and pricier new food items.
Some of the additions such as salads, white-meat chicken nuggets and fruit options with Happy Meals have served the dual purpose of enabling the company to state a commitment to a healthier, balanced menu while bringing in new customers who aren't there for the hamburgers.
McDonald's now hopes to attract more patrons with amenities that might entice them to come in and stay awhile.
Inside, repairs to the digital-media centers reduced geeks to gawkers as the restaurant filled at lunchtime on a recent day. When working, the BlazeNet machines allow customers to search a library of 40,000 songs and to create a custom CD for 99 cents per song. Other kiosks let them surf the Web, print out photos in six seconds or get ring tones instantly.
Morningstar Inc. analyst Carl Sibilski said all the new concepts reflect a stepped-up effort by McDonald's to please young adults — particularly 18- to 24-year-old men, the demographic "gold mine" for fast-food purveyors. "If you want to drive same-store sales, you have to target your message to your most profitable customers," Sibilski said. "That explains the TV screens ... and the hipper advertising. They've made it OK (for young adults) to go to McDonald's again. It's not just someplace they went as a child."
Now playing at its new flagship restaurant: Digital-media kiosks for burning CDs, downloading cell-phone ring tones and printing photos. Dozens of plasma-screen TVs. Wi-Fi Internet access. New chicken sandwiches. Double-lane drive-throughs. And an adjoining McCafe with gourmet coffees, fancy pastries and a fireplace.
Liz Zepeda, a representative of BlazeNet, demonstrates an Internet kiosk at McDonald's flagship restaurant in Oak Brook, Ill. The new restaurant is open to the public but is also a test site for attracting more customers by making such technology available to them.
