The next time you set foot in your friendly neighborhood McDonald's (NYSE:MCD), you might be greeted with a new way to order exactly what you want. Starting in 2015, McDonald's is bringing "Create Your Taste" kiosks to more than 2,000 of its U.S. restaurants.
That's a relatively small slice of the more than 14,000 domestic locations in operation today. But considering only four restaurants in Southern California featured the ordering platform at the start of this month, it represents a massive stateside expansion for the new system.
What is McDonald's trying to fix?
McDonald's goal is clear: By embracing the higher-quality concept -- keep in mind it ranked dead last in a recent Consumer Reports burger taste survey behind 20 other leading chains -- the fast-food behemoth hopes to reverse its seven-month streak of global comparable-store sales declines.
That underperformance has come amid a shift in consumer preferences toward more expensive fast-casual chains such as Chipotle Mexican Grill, which allows diners to fully customize their meals through a quick assembly line-style approach. For perspective, Chipotle achieved a stunning 19.8% jump in comparable-store sales during its most recent quarter.
Just like it sounds, Create Your Taste allows walk-in diners to use a touchscreen interface to customize their burger or chicken sandwich with premium ingredients including guacamole, tortilla strips, grilled pineapple, thick sliced bacon, brioche buns, and -- undoubtedly much to the delight of Royal Red Robin Burger fans -- even fried eggs. The sandwich is then hand-delivered by a McDonald's employee to your table, open-faced in a polished wire basket.
Unsurprisingly, however, that premium experience does not come cheap. A customized burger with a drink and fries will generally cost a few dollars more than its typical Value Meal counterpart. Such orders also typically take four to seven minutes to prepare -- practically an eternity in the quick-service restaurant world. That seems particularly contradictory when you remember McDonald's only recently toyed with the idea of guaranteed 60-second orders to appease today's fickle, time-sensitive diners.
"Built by you. Made by us. Worth the wait."
While it might seem at first like McDonald's is grasping at straws with Create Your Taste, when you dig deeper there's an undeniable sense the company could actually be onto something.
First, McDonald's is one of the few global chains that enjoys the luxury of operating so many locations that even this 2,000-restaurant rollout can be implemented without undue risk to its broader business. At the same time, this initial push is large enough that any early success could have a material positive influence on McDonald's results and should give it valuable feedback regarding Create Your Taste's viability on a broad scale.
Second, McDonald's is not abandoning its existing menu, which is going through a much-needed simplification to reduce prep mistakes and improve order times for traditional tickets. Some skeptics have noted Create Your Taste won't fit in smaller McDonald's locations, because it requires a separate assembly area. However, that doesn't particularly matter as many of those smaller locations overwhelmingly rely on drive-thru orders, which are dominated by rushed diners who aren't necessarily at risk of defecting to the walk-in fast-casual chains that are inflicting pain on McDonald's in the first place.
What's more, the location expansion indicates Create Your Taste has shown promise in the relatively small-scale test McDonald's has employed to date. That test included not just the Southern California restaurants but also a handful of locations in Australia, where McDonald's is already rolling out the program for each of its 900 plus regional locations.
"Feedback on our new Create Your Taste range and our table service has been phenomenal," said McDonald's Australia CEO Andrew Gregory in October. "We are looking forward to rolling out the concept around the country in the coming months."
Sure enough, McDonald's said earlier this month the positive performance of its Australia stores helped offset broader comparable sales declines in its APMEA region.
All things considered, while industry watchers' concerns have understandably resulted in mostly negative publicity so far, I'm convinced we should not rule out the possibility that Create Your Taste might be a great idea.