McDonald’s Q4 2022 update this week reinforced some of the ways that brands are finding to navigate the inflationary environment. We’ve previously covered how certain QSR chains are beating inflation, but seeing McDonald’s visitation trends compared to its peers reinforces how effective its loyalty program and other marketing strategies have been. We’ve highlighted a few takeaways from the company’s results below:
- McDonald’s on the short list of restaurants with positive visitation growth. McDonald’s U.S. comparable sales increased 10.3% for the quarter, with management calling out a higher average check (backed by strategic price increases), as well as positive guest counts as the key contributors. McDonald’s got off to a great start with the quarter with its Cactus Plant Flea Market adult happy meal promotion – one of the most successful promotions the QSR category has seen in some time – which led to the highest weekly digital transactions the company has ever seen in the U.S. The promotion helped drive double-digit comparable sales in October. However, other marketing campaigns that played on consumer nostalgia (Boo Buckets, and McRib) created buzz for the brand without overly burdening restaurants with complexity. Compared to the QSR category–which experienced year-over-year visitation declines in November and December, (and would have seen a slight decline in October had it not been for the aforementioned Cactus Plant promotion lifting the entire category) it’s clear that McDonald’s is finding ways to connect with customers despite inflationary headwinds.
- Loyalty program driving increased visit frequency. McDonald’s loyalty program was one of the more notable stories in the QSR space coming out of the pandemic. At the end of 2022, the company reported that it had almost 50 million active loyalty users in its top six markets (with the majority domiciled in the U.S.). This loyalty program–and the company’s ability to effectively communicate with its customers through the McDonald’s app (which helped to drive digital orders to 35% of systemwide sales in its top six markets during the quarter)have helped to lift repeat visits. Our data indicates that McDonald’s saw a mid-single-digit increase in visits per visitor for 2022, with mid-to-high single-digit increases in 1H 2022 and low-to-mid single-digit increases in 2H 2022. It’s unlikely that McDonald’s will post mid-to-high single digit gains in visit frequency in 2023, but low-single-digit growth seems like an achievable goal for the year with new promotions and marketing collaborations in the pipeline.