McDonald's Strategy

Company's topline in Q3 continued to be negatively impacted due to refranchising, as the company-operated sales were increasingly replaced by franchised revenues in the form of rent and royalty, based on a percentage of sales. Going forward, we are likely to see this trend sustaining, as the company works on its goal to be 95% franchised by 2018. Most of the refranchising will take place in the company's key future growth markets: High Growth (consisting of China and Asia Pacific) and Foundational (Japan, India, and other South-East Asian nations).

All-day breakfast has helped McDonald's significantly in boosting its revenue growth over the past couple of quarters. However, as of late, the interest in all day breakfast was seen waning. In order to keep the buzz alive, McDonald's is introducing a "Happy Meal" for breakfast for kids, with two McGriddles cakes, or with an egg and cheese McMuffin. It is also adding new menu items like McGriddles, hotcakes, sausage burritos, oatmeal, and hashbrowns, in addition to McMuffin and biscuit sandwiches introduced in September. Further, McDonald's has also been experimenting regionally. For instance, McDonald's Japan introduced a new flavor of french fries, combining pumpkin and chocolate, for Halloween.

SHOWCASING THE "HEALTHINESS" OF ITS FOOD

Post the transition of its 16,000 restaurants in the U.S. and Canada to cage-free eggs, the company has launched a new YouTube video series called "What's Cooking?" The initiative will showcase the preparation behind some of its most popular food items, to re-instill the health factor, in line with preferences of the millennial consumer. Other initiatives undertaken are shifting from margarine to butter, piloting fresh patties, and removing preservatives from some of its food items. The video series can help change the perception among its customers, by showcasing