McDonald's to Expand Table Service in Break With Tradition

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McDonald's to Expand Table Service in Break With Tradition

McDonald’s plans to offer table service at all of its US restaurants, upending decades of fast-food tradition in a bid to placate pickier customers.

Table service is currently in about 500 locations, but will be rolled out to the entire US chain, McDonald’s said at an event in New York. The company also is bringing mobile ordering and payments to the country in 2017, as well as more digital kiosks.

McDonald’s already has table service at some locations in New York, Florida and Southern California, as well as many places abroad. It’s coming soon to markets such as Boston and San Francisco, the company said. New positions will be created at restaurants to serve food and help customers with touch-screen orders.

The shift is significant for a company most responsible for popularising fast food - along with a more stripped-down approach to restaurant service. But competition and the rise of fast-casual chains have elevated expectations. Customers also are looking to technology to help make restaurants more convenient.

"Customers are getting increasingly demanding, and their expectations will only grow," Chief Executive Officer Steve Easterbrook said at the event.

Sluggish Stock

A drop in the cost of groceries has added pressure to fast-food chains this year because it’s increasingly cheap for customers to eat at home. Restaurant companies also have blamed anxiety around the presidential election for hurting results. McDonald’s shares are up just 1.1 percent in 2016, lagging behind the 7 percent increase for the Standard & Poor’s 500 Index.

The new approach may bring in the kind of customers who balk at lines, said Ivan Feinseth, analyst at Tigress Financial Partners.

“It will make it look less congested at the point of ordering,” he said. “Then people feel they won’t have to wait that long.”

Earlier this month, the world’s biggest restaurant chain said it was planning a “significant” boost in technology spending. The investment will help fund the new self-serve kiosks and mobile-ordering application. The plan includes expanding a smartphone ordering app across its 14,000 domestic locations, starting next year. The kiosks cost about $7,000 each, and McDonald’s said it plans to help franchisees defer the costs.

US Remodeling

In addition to the new digital kiosks, McDonald’s is remodeling its US restaurants as part of a program it calls the “experience of the future.”

The changes have already been rolled out in restaurants in Germany, France, the UK and other international markets, where the improvements have helped increase sales, according to the company. Part of the broader upgrade in the US includes hiring more workers to ease the ordering process and deliver food to customers at their tables, Easterbrook said.

The hiring push comes amid a tighter US job market, with low unemployment and rising minimum wages. In response, restaurant chains and retailers such as Wal-Mart Stores Inc. have boosted pay to attract workers. Last year, McDonald’s announced raises for employees at company-owned restaurants, which account for about 10 percent of the US total.

Lower Turnover

Easterbrook said the higher pay has reduced turnover and improved service, benefits that the company has highlighted to its franchisees.

“If you reduce your turnover, you get some stability,” Easterbrook said in an interview. “It makes us a more attractive employer, which helps the operators and the company.”

McDonald’s had fallen behind competitors in technology. Dunkin’ Donuts and Taco Bell already allow diners to order via smartphones, and Starbucks Corp. boasts millions of active rewards members. McDonald’s, based in Oak Brook, Illinois, is looking to grab some of those consumers with its own faster and more convenient service.

For 60 years, McDonald’s dictated how customers ordered and got food, Easterbrook said.

“That’s changing now,” he said. “It’s a totally different mindset.”

News by Bloomberg, edited by Hospitality Ireland