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New York
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McDonald’s sales have finally turned a corner, thanks in part to “A Minecraft Movie” meal deal that marked the chain’s largest marketing campaign ever.
Sales at McDonald’s US locations open at least a year rose 2.5% for the quarter ending June 30, putting an end to two consecutive quarters of sinking sales. The chain credited its “standout marketing,” which included the massive movie promotion and the launch of crispy chicken strips, for the turnaround.
McDonald’s in late March released a Happy Meal for kids with themed toys and an adult meal tied with the release of the Minecraft Movie, which was released by CNN’s sister company Warner Bros. Pictures and grossed nearly $1 billion worldwide.
The promotion ran in 100 markets, helping global sales at stores open at least a year rise 3.8%. Plus, total revenue jumped 5% to $6.8 billion, the company said Wednesday.
Last quarter, CEO Chris Kempczinski said that low- and middle- income customers were pulling back their spending and visits at the chain, prompting McDonald’s to freshen up its menu offerings and promotions.
Kempczinski said Wednesday that the trends largely continued: Visits from low-income consumers “once again declined by double digits versus the prior-year period.” But visits from middle-income consumers has improved.
He added that “re-engaging the low-income consumer is critical” because they visit McDonald’s more frequently than middle- and high- income customers. To do that, it will continue to offer value meals and has extended the $2.99 price for the Snack Wrap until the end of the year.
Still, Kempczinski acknowledged that “consumers’ value perceptions are most influenced by our core menu pricing,” a nod to the connotation from some that the chain has gotten too expensive.
Value-minded consumers are “too often” seeing combination meals that cost more than $10 and that is “shaping value perceptions in a negative way,” Kempczinski admitted. “We’ve got to get that fixed.”
McDonald’s is having conversations with its US franchisees to develop ideas on how to make changes, but he didn’t offer additional details.
Given the success of its new menu items and promotions, McDonald’s is keeping its foot on the gas this quarter. Next week, the company plans to launch of a new “McDonaldland” meal aimed at nostalgic adults, with a mystery-flavored shake. It’s also revamping its beverage options under the CosMc’s banner at 500 McDonald’s in September following the closure of that spinoff.
McDonald’s (MCD) stock opened nearly 3% higher.
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