By Julie Jargon
More McDonald's Corp. customers across the U.S. will be able to choose table service inside restaurants, in an attempt to provide something beyond what a traditional fast-food chain offers.
It is part of an effort central to revive the burger giant's sales, which have flagged in recent quarters. Franchisees and analysts have been wondering what else McDonald's would do to drive interest in a brand that has been struggling to re-establish its relevancy in a market where consumers have more choices than ever to get food, including burgers.
The company that derives nearly 70% of its sales from the drive-through is hoping changes to the restaurants themselves will help lift sales, according to McDonald's USA President Chris Kempczinski.
Test runs at more than 500 restaurants in Southern California, New York and Florida showed an increase in foot traffic and contributed to a mid-single-digit percentage increase in restaurant sales, lifting the $5 to $6 average check by $1, on average. Customer satisfaction scores also have increased at those test stores, executives said, because families, in particular, appreciate having their food brought to them.
McDonald's Chief Executive Steve Easterbrook, speaking at a McDonald's in New York's Tribeca neighborhood on Thursday, said the company has long expected customers to adapt to its business model of ordering at the counter and then waiting to collect their own food. Now, he said, "we're adapting our business around customers."
Analysts say there islittle downside, since the cost is relatively low, but there are risks. If the restaurants aren't able to keep their stores clean and offer friendly service -- two challenges that have plagued the company -- having table service isn't going to enhance the experience, said Darren Tristano, vice president at restaurant consulting firm Technomic Inc.
In addition to table service, the company is also installing free-standing kiosks inside the restaurants, which have proven successful in overseas markets including the U.K., France and Australia, according to the company, which said people tend to order more food when they don't feel pressured to order at the counter. Customers can pay for their food at the kiosk and indicate whether they want table service.
Installing the kiosks themselves and rearranging the flow of the restaurant can range from about $28,000 to $60,000, depending on the volume of business the restaurant does. They willonly be installed in restaurants that are remodeled to be more modern. Starting early next year, the kiosks and table service will be rolled out in Boston, Chicago, Seattle, San Francisco and Washington, D.C., and eventually the plan is to do it nationwide.
McDonald's said it is providing additional training to employees who will be interacting with customers more, including greeting them as they enter.
"The biggest risk is that traditional Boomer and GenX customers may not give them the permission to make these changes and rebel against them by opting to go to other competitors," Mr. Tristano said, citing an effort by Ruby Tuesday to upgrade their menus and interiors. "Their customers saw them as a traditional casual dining chain that served food at the $14 check average and the new contemporary interiors failed to attract more affluent consumers and scared away their loyal customers."
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(END) Dow Jones Newswires
November 18, 2016 10:14 ET (15:14 GMT)
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