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Your McDonald's Experience Is About to Change

By Daniel B. Kline - May 2, 2018 at 6:05AM

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The company is updating 1,000 U.S. stores each quarter.

The next time you walk into a McDonald's (MCD 2.46%), you may be placing your order through a touch screen, rather than a live person.

During the company's first-quarter earnings call, CEO Steve Easterbrook said the company had begun "an aggressive plan and one of the most significant transformations in our history."

Since the year began, the chain has modernized nearly 1,000 of its locations in the United States. This includes installing ordering kiosks, adding curbside pickup in some locations, and improving the drive-thru experience. The initiative, dubbed the "Experience of the Future" (EOTF), works in tandem with the company's improvements on the digital side, including mobile ordering and payment, as well as delivery in a growing number of stores.

McDonald's plans to bring EOTF to 1,000 restaurants in each quarter of 2018 -- though that would still be less than a third of its 14,000-plus U.S. locations.

"This is an aggressive pace," said Easterbrook. "1,000 projects would be like modernizing every McDonald's restaurant in Australia, and we're doing that each and every quarter."

A McDonald's store

McDonald's is revamping 1,000 U.S. stores a quarter. Image source: McDonald's.

What else is McDonald's doing?

The company has also made some changes to its menu. This includes cooked-to-order Quarter Pounder hamburgers made with fresh beef. It has also revamped its menu, which CFO Kevin Ozan credited for part of the chain's 2.9% increase in U.S. comparable-store sales in the quarter.

"Sales were fueled by higher average check, driven by two primary factors: menu price increases as part of a broader strategic pricing reset of the menu board, and favorable shifts in product mix, consisting of trade-up to new premium products and a higher number of items per order for $1, $2, $3 Dollar Menu transactions," Ozan said.

These increases have come despite a drop in the chain's U.S. guest count. Ozan noted that the overall industry is facing challenges and that McDonald's knew it would lose some customers when it dropped some of its lower-priced value offerings. The chain also saw a decline in breakfast traffic, which the CFO attributed to increasing competition in the space.

"We remain focused on executing our plan to deliver guest count growth through offering the appeal to customers, as well as taking actions to grow our breakfast business," Ozan said.

A whole new McDonald's

EOTF will change how many customers interact with McDonald's. Ordering kiosks will be the most noticeable change. Customers will still see human workers, but those employees will be there to facilitate the use of the kiosks. Between those and mobile ordering, live human beings will become a smaller part of the McDonald's experience. That may lead to larger orders (as people won't have to request extra large fries or multiple milkshakes from a potentially judgmental person), and it will likely lead to fewer mistakes, as a human won't be inputting the order.

Yet this isn't as radical a change as it may have seemed when EOTF was first being tested a few years ago, as other chains have built up their own mobile ordering technology. Still, it's a big shift from the decades-long experience of walking up to a McDonald's cashier who welcomes you and takes your order.

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