McDonald's Corporation Champions Breakfast, Butter, and Better Service

By Motley Fool Staff Markets Fool.com

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All-Day Breakfast has stolen the show when it comes to McDonald's(NYSE: MCD) turnaround, but other initiatives are also laying a long-term foundation for success. Many of the company's efforts center around better care for employees and tastier food.

In this segment from Industry Focus: Consumer Goods,Motley Fool analysts Vincent Shen and Sarah Priestley discuss the steady hand CEO Steve Easterbrook has applied to improve service, brand perception, and the overall outlook for his company.

A full transcript follows the video.

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This podcast was recorded on Aug. 30, 2016.

Vincent Shen: One of the initiatives that a lot of people have attributedsuccessfully to Easterbrook is all-day breakfast,with the fact that menu complicationwas a big issue for customer service in general. AndI think that definitely flowed down to the customer experience. They justmentioned that trying to keep therestaurants running smoothly and efficiently,with all these different menu items,and the fact that it just took longer,for example, people in line trying to figure outwhat to order, that slows down the works allthe way down the line.

Sarah Priestley:Absolutely. And you touched on all-day breakfast. All-daybreakfast has been a huge driver for them, as you can see in the quarterly results. And they actually rolled that out in four months, whichI think demonstrates that they've gone from such a cumbersome, slow-movingorganization to actually beingvery fast to enact this. They launched it inOctober of last year, which is going to make the comps for this coming quartervery difficult for them, I imagine.

But they're also doing other things. They moved frommargarine to butterfor the flavor. They're using MSC-certified fish; preservative-free in their chicken nuggets. They're moving away from antibiotics. They'redoing a lot of things to improve the quality of the food that they're delivering. Andsome of these things that they're doing, obviously, they're using as promotional to prop the products. But some things they're not. They'reactually using sustainable beef sources, and they're mixing that in currently at a low percentage into what they already use. Andthey're going to gradually increase that untilthey're using 100% sustainable beef. Thisisn't something that they've talked about very much,and it shows you, I think, that theirquality is being taken very seriously at the company,not necessarily just in advertising.

Shen:Yeah,it's not just marketing to compete with Chipotle, for example, to say, "Hey, we're also sustainable, we're alsogiving you the healthier foods that a lot of consumersseem to be wanting these days."

Priestley:Exactly, yeah.I think they were heavily criticized beforeEasterbrook took over fortreating millennials like a homogeneous group, and trying to push forward healthy eating -- kale was always the joke. I think this is similar. They could becriticized for going toward sustainabilityas a ploy,but I really do think they're trying to embody that. And I think,generally, that it's just becoming a better organization. They're taking better care of employees. They've raised wages. There's tuition assistance, which is fantastic. I think 5,000 people qualify for Archways to Opportunity, which is helping them. And this has had a direct impact. It's reduced turnover, and it's also giving customers friendlier, happierpeople to interact with when they go to McDonald's.

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Sarah Priestley has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.