2015 is going to be a bleak year for McDonald’s in the US. For the fist time since the 1970’s, the restaurant will close more restaurants there than it will open. In May this year, US sales were down by 2.2 percent, a worse than expected performance. In a sign of changing consumer habits, more and more millennials reject fast food chains for more niche eating establishments – for them, McDonald’s is regarded as unhealthy, outdated, downmarket and not a nice place to be.
Luckily for McDonald’s, different countries have different relationships with the brand. In Brazil for instance, they are preparing to expand even more. In 2014, McDonald’s had increased options on their ‘saver menu’ with the purpose of maintain market share in the country – Brazil is their 7th biggest market in the world. Without revealing exact numbers, the company ended 2014 as market leader on fast food there.
In an interview to Brasil Economico, McDonald’s VP of Marketing for Latin America, Roberto Gnypek said that 82% of the economically active population in Brazil eat out at least once a week. “In the US 100% of the economically active population eat out. So, the good news for Brazil is we still have scope for growth. That’s why we see a lot of [fast food] players coming back or arriving for the first time in the country”, added Gnypek.
Moving away from the main urban cities like Rio and Sao Paulo, they plan to focus on small/ medium towns in other parts of the country, like the North-eastern region. Still, a “small/medium” city in Brazil is around 300/350 thousand people at least, this is just to reminder how big the country is.
What is really pushing the expansion forward are the new healthier options on the menu. The Brazilian menu has three new salad options as well as a grilled chicken sandwich on a wholemeal bread – the Chicken Supreme Grill, which has, in my opinion, almost a healthy look. However, the changes on the menu are not necessarily aimed to millennials but to those who have now more money to spend eating out. “Although the Generation Y is largely a heavy consumer of fast food and their opinions matter, the effect of the rise of social classes is even greater”, commented Gnypek.
McDonald’s is also investing heavily on their beverage options. In addition to the cold drinks like smoothies and milkshakes, the company wants to strengthen their McCafe brand as Brazilians love their coffee. At the moment only 85% of their restaurants serve coffee all day and they aim to reach 100%.
On top of all that, McDonald’s succeeded to built a much better brand image in Brazil that is far cry from their reputation in the US. According to Gnypek, McDonald’s brand image in the country is one of three best in the world.