McDonald's recently announced that it will be expanding a new offering, Create Your Taste kiosks, in 2015. These new kiosks will allow customers to place customized orders for hamburgers and even chicken sandwiches in the future. Patrons can customize anything from the bun down to the toppings and sauces that garnish your sandwich.
Currently, the Create Your Taste platform is being tested in four stores in California, but it is immediately expanding to 30 locations across five additional states before reaching 2,000 stores in 2015. To give you an idea of how widespread Create Your Taste kiosks are being implemented, 2,000 stores total about fourteen percent of McDonald's domestic locations.
Create Your Taste marks a big departure from the standard menu and causes two major changes to the typical McDonald's experience. In the past, this fast food chain has always relied on quick service as a key component of their brand. However, with this new program, customers will have to wait around seven minutes to receive their custom-made sandwich.
Compared to the typical fast food experience, the wait exceeds what consumers may expect. When compared to fast casual restaurants like Five Guys or Panera Bread, on the other hand, the seven-minute wait does not seem too outrageous. Since it will not be available via drive-through, it should not slow down customers on wheels.
The other major change lies in the fact that these Create Your Taste items will drain your wallet more than McDonald's standard fare. A typical meal of a custom burger, medium drink and medium fries will set you back $8.29 at a test location in California.
This is a minor increase in price compared to the typical Extra Value Meal, but it represents a significant increase for those customers that frequently buy from the Dollar Menu & More. Of course, these prices will be subject to change depending on your market and any future changes that are made during the rollout of the program.
McDonald's stock has been under pressure recently as same-store sales have been declining. Will Create Your Taste kiosks be the answer to help turn around their stock price?
Heavy promotion will be necessary to reach and explain the benefits of the new Create Your Taste kiosks to consumers. In addition, stores may need additional staff on hand to explain these new kiosks to less tech-savvy customers. Both of these lead to additional costs for the company.
The potential for stronger financial performance in the future exists as long as the increased price on these premium items outweighs the additional costs created by the program. These kiosks could do just that by reliably up-selling customers to boost sales where employees may have under-performed in the past.
That said, McDonald's faces potential pitfalls with this new venture. One such danger of the Create Your Taste program lies in the premium prices associated with these customized sandwiches. Consumers may not be able to justify the premium prices associated with these products and may instead opt for the traditional cheaper items that have always been offered. While the economy is recovering on paper, many people have not felt the benefits in their wallet, which could doom these premium items before they have a chance to catch on.
Only time will tell if this new program will be able to turn around same-store sales and increase both revenue and the stock price of McDonald's. The more these new kiosks are seen popping up in locations around the country could be a good measure of how well the program performs. If they start showing up at every Golden Arches nationwide, it might be a great sign for McDonald's future.