"It's quality over quantity, not a lot of new limited-time offerings," Easterbrook said on McDonald's second-quarter earnings call on Thursday about how he and his team will enhance the menu to entice consumers.
Easterbrook, credited by many industry observers with fixing McDonald's ailing U.K. division by focusing on improved food quality and sleek restaurant remodels, added that all the company's energy is going toward revitalizing the core menu. That means, in Easterbrook's words, "hotter, fresher and juicer" Big Macs and double cheeseburgers instead of new and gimmicky food.
Easterbrook added that customers should expect a smaller number of "higher impact" new items, as well as "more affordable options."
As an example of a "higher impact" menu item, British-born Easterbrook pointed to the successful rollout of the McLobster in Boston, the unofficial lobster-roll capital of the U.S. In terms of improving affordability, McDonald's continues to look to introduce what it calls "a national value platform."
The company had unveiled a $2.50 value deal in early June, coined the "Summer Break Menu," that paired items such as a fish sandwich with fries. But the promotion ran into some execution hiccups late in the second quarter, confusing customers as it bumped up against discounts being offered locally by franchisees. "The $2.50 value is not the answer; it took a little bit of time to execute because of local initiatives," Easterbrook conceded.
The less-is-more approach being taken by Easterbrook is rather unexpected for a fast-food juggernaut known for introducing all sorts of fattening eats in the attempt to increase sales. Remember the failure that was Mighty Wings? Or the Angus Third Pounders? But it's an approach that has seen success in some overseas markets for Mickey D's.
McDonald's Australia, which Easterbrook praised on the earnings call for its general cleanliness and the speed with which franchisees adopted custom burger technology, has notched 10 straight quarters of sales growth. And the U.K., which Easterbrook formerly ran, has now delivered an astounding 37 consecutive quarters of sales increases.
By shifting its sights to getting its U.S. operations right as opposed to continuously introducing new products, McDonald's could open itself up to market-share losses to rivals Sonic (SONC), Restaurant Brands' (QSR) Burger King and Wendy's (WEN), which all focus on frequent new product launches. It's a huge wager by Easterbrook, and one that has not lifted results yet at McDonald's U.S. business, which accounts for 40% of the company's sales.
McDonald's U.S. same-store sales fell 2% in the second quarter, worse than analysts' average estimate of a 1.5% drop. Same-store sales in Europe and Asia were also below Wall Street's expectations, with difficulties in Russia, Japan and China.
McDonald's highlighted improving sales trends in France, Germany, U.K. and Australia and certain markets in top-tier cities in China. Sustaining that sales improvement will be critical to McDonald's achieving its lofty goal of global same-store sales growth for the third quarter.
Excluded from that expectation for a better third quarter is McDonald's U.S. According to Easterbrook, there have been only "pockets" of sales success at the local level, such as in the Northwest, Boston and Kansas City.
The CEO did confirm recent reports of McDonald's expanding its all-day breakfast platform. For McDonald's, breakfast makes up about 25% of its U.S. sales.
USA Today reported this week that McDonald's is expanding its all-day breakfast experiment to 132 locations in Nashville, Tenn., this month. In the spring, McDonald's had launched all-day breakfast in 94 San Diego locations. Now it's looking to roll out all-day breakfast nationwide this fall. But at least one big breakfast rival says it's not concerned.
"We have all-day breakfast anyway; we have been marketing it very heavily," Dunkin Brands (DNKN) CEO Nigel Travis said in an interview with TheStreet. Travis noted that Dunkin Donuts has several new breakfast sandwiches set for release later this year to compete with McDonald's.