Companies & Industries

Mickey D’s upscale push

Menu improvements gain sales traction.

mcdonalds wrapGrilled chicken, bacon and cheese wrapped in a tortilla—that’s hardly an innovative product, is it? It is for fast-food behemoth McDonald’s, where a decision to start selling wraps at its North American restaurants this spring helped boost sales after a disappointing start to 2013.

Beyond that short-term sales bump, the Signature McWrap is an emblem of the company’s larger strategy to woo back patrons who think their food has too much fat and too few vegetables. “We’re going to sell it to whole new customers who haven’t been in McDonald’s in a while,” says John Betts, McDonald’s Canada’s president and CEO.

Previous attempts to inject some maturity into the chain’s menu such as the Arch Deluxe toasted deli sandwiches flopped. But the new, grown-up offerings like salads, fruit smoothies and espresso are attracting diners. McDonald’s announced global sales increased by 3.6% in May overall and 2.6% at stores open at least 13 months. While McDonald’s doesn’t disclose sales figures for Canada, it saw a 2.4% hike in the United States. The company credited new menu items like wraps and an egg-white breakfast sandwich for the lift.

The challenge for McDonald’s is overcoming preconceived notions about its offerings, says Betts. Through the launch of its McCafé brand of coffee products, then smoothies and now wraps, the company has indeed burnished its reputation with consumers. The NPD Group tracks customers’ perception of food quality, and “McDonald’s traditionally has always ranked lowest,” says Robert Carter, NPD’s executive director of food service in Canada. “But that score has steadily increased as they’ve focused on diversification.”

McDonald’s Canada has also proven adept at tweaking global products for the local market. The wraps were first launched in Poland and refined in Austria. Testing them for Canada, the company found consumers appreciate more spice, so the sweet chili sauce was made hotter. Canadians also like plenty of texture, leading to tortilla chips being sprinkled in a “fiesta” version.

“The things you can do with these wraps are—I don’t want to say unlimited—but there are so many combinations you could do,” says Betts. The Canadian menu overall has been shaped by the relatively healthy economy and our willingness to pay for quality. While the United States recently axed the premium Angus burger in favour of budget-friendly offerings, it remains on the menu in Canada.

“Canadians aren’t just looking for a ‘gut fill,’” says Carter. “They’re looking for a quality experience.”