McDonald’s shares dropped almost 5% during its investor day presentation after CEO Chris Kempczinski said industry customer traffic growth in key markets will be flat while inflation continues to accelerate.
The burger giant on Wednesday outlined key details of a multi-year $8.5 billion investment to revamp its restaurants, make its menu tastier and upgrade technology, including an AI program called ArchIQ. The technology takes customers’ orders at drive-thrus.
“We must be the first choice for more customers more often,” to capture marketshare Kempczinski said.
The company’s shares have fallen 22% so far this year.
The new program called NEXT comes on the heels of an effort to win back low-income customers who have pulled back on their visits to McDonalds as their costs have risen due to inflation.
After introducing hand breaded chicken to more than 10,000 restaurants in Asia, McDonalds is testing the new menu item to the US while also testing fresh beef patties in other markets outside the US. The company is also introducing new flavors to its Chicken McNuggets while it tests adjusting cook times and oil volumes, said executive vice president Jill McDonald.
It’s also introducing more grilled chicken sandwiches and wraps to its menu.
The fast food chain is also catering to more GLP1 users with smaller portions of high protein items, including egg bites, chicken bowls and snack wraps.
McDonald’s is also introducing new store layouts that will cost franchisees about $800,000 to implement over time with McDonald’s contributing “rent relief and capital support,” said Chief Financial Officer Ian Borden.
Approximately 10% of US adults use these diet drugs and 84% of households with a GLP user visit McDonald’s regularly, noted new president, Skye Anderson.
The company said that of the $8.5 billion, roughly $5 billion will be invested by 2030 through a combination of rent relief and capital support for franchisees.
The burger chain also expects restaurant expansion to contribute about 2.5% of systemwide sales growth in 2027 and around 2% by 2030.
It also set a goal of gaining 1.5 percentage points of market share in chicken products globally by 2030 as rising beef prices boost demand for chicken.
“We already have the customers and protein credentials to set us up as consumer tastes change,” Anderson said.
The new restaurants will have open kitchens that expose the beverage preparation areas, upgraded play places and delivery pick-up lockers, executives said.
The drive-thru technology, which has been rolled out to 8,000 restaurants in China, will “free 50 hours of labor each week,” said Brian Rice, executive vice president of technology.
“ArchIQ is a game changer,” he said.