McDonald’s Plans to Revitalize Global Business

CHICAGO McDonald’s chairman and chief executive officer Jim Cantalupo and other members of the fast-food chain’s senior management team said they plan a new approach to improving sales, marketing and brand loyalty.

“The world has changed. Our customers have changed. We have to change, too,” Cantalupo said today during a conference call with investors. “The new McDonald’s is focused on building sales at existing restaurants rather than on adding new restaurants.”

As a result of the planned changes, the Oak Brook, Ill., company expects 2003 capital expenditures to be $1.2 billion, $800 million less than in 2002 and $700 million less than previously announced.

McDonald’s president and chief operating officer Charlie Bell identified the company’s four business objectives: attracting more customers, getting existing customers to visit more often, building brand loyalty and increasing productivity to increase margins and profitability.

The company’s marketing plans over the next 12 to 18 months include targeting families with children and young adults, Bell said. “Children are McDonald’s enthusiasts. They think McDonald’s is a destination,” he said.

“This is the age where an effective brand can make customers for life,” Bell said about targeting young adults.

McDonald’s will focus on other media channels besides TV to reach its targets, but Bell would not elaborate.

The marketing message will “refocus on an exceptional brand experience, rather than a transaction,” Bell said. The previous focus “cost us brand loyalty.”

“We will no longer distinguish between brand-building communications and those that do not build our brand,” Bell said.

“Making our brand successful does not mean cheapening and not discounting,” Bell said. There will be a renewed focus on spokescharacter Ronald, Bell added. “We’re not allowing him to be the great communicator that he is. This will change, and it already has,” he said.

“We know that brand management is not an academic exercise,” Bell said, adding the company will measure performance.

The meeting with investors comes just days before McDonald’s major advertising agencies, Leo Burnett and DDB, both in Chicago, are scheduled to present new global creative ideas.