McDonald's Boards The Vegan Train In The Technological Era

McDonald's Corporation MCD recently named Ian Borden as President, International. In this new role, Borden will assume responsibility for all international markets. These markets have strong momentum and extensive growth opportunities.

And as the whole world is shifting its mind frame to "vegan," McDonald's can no longer afford to ignore this segment. And it is the latest fast-food chain to join the craze and sell fully-vegan meals in the UK as the Veggie Dippers meal goes on sale on January 2.

Technological Shift

The world's largest fast food chain marked a major shift of the industry this year with the $300 million acquisition of Dynamic Yield in March. This wasn't only the largest transaction in the restaurant industry but a major disruption for the overall fast food industry.

This technology will provide digital menu boards that will offer items based on customer preferences, time of the day and other criteria. With this acquisition, the fast-food king, not to be confused with Burger King, showed its growth plan is well underway by finding new ways to enhance the customer experience.

Financial Performance And Position

On October 22, the company's third quarter earnings fell short for the first time in two years. The results clearly showed that the company is struggling to lure US customers. Its competitors are simply getting more buzz.

Consolidated revenues did grow but a slim 1 percent to $5.4 billion comparing to previous year's quarter but operating costs and expenses increased 2 percent and net income decreased 2 percent with 0 percent change in diluted earnings per share. So, results showed the need to further enhance the innovational culture to keep up with competitors.

Competition

KFC, a subsidiary of Yum! Brands YUM, who also holds Pizza Hut and Taco Bell in its portfolio, has already joined the vegan craze, as did Greggs Plc GRG, UK's largest bakery chain. Yum! Brands have already invested $200 million in Grubhub GRUB back in 2018. These moves clearly show even Brexit aside, UK's fast food industry is facing some drastic changes in its business infrastructure. And speaking of Burger King, it already gave a headache to McDonald's with Whoopers but it also began the conversation of a meatless future quite some time ago with its Dunkin' Beyond Meat breakfast sandwiches.

In China, McDonald's is trying to lure customers with its McCafé, but Luckin Coffee Inc LK, with soaring growth and revenues, and Starbucks Corp SBUX are playing the big guns, heating up the battle in China. Starbucks also partnered with the tech firm Brightloom and is offering a unique experience in Beijing as it showed a massive improvement in July with Starbucks Now, the layout which will debut in more locations throughout the fiscal year 2020. The innovative experience of Starbucks Now embraces the digital revolution by offering consumers a quicker service and special menu for the ‘on-the-go' people while keeping limited seating, something not common in Luckin stores.

And as Starbucks manages to limit overheads with less employees, it will be able to open more stores so the competition in China is definitely brewing.

Outlook

As McDonald's embraces a new definition of a ‘happy meal', things are bound to change as restaurants over the world find new ways to capitalize on increasing demand from consumers for vegetarian and vegan options.

Along with developing new technologies or partnering with more tech companies to enhance the customer experience, this is only the beginning of restaurants changing their business models and the industry as a whole, and not even the fast-food king is exempt from this undergoing change.

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