McDonald's finds loose change nice little earner
The value-meal initiative in Australia has helped resuscitate earnings this calendar year and, along with a range of other offers such as its Olympic sponsorship, the local branch of the fast food chain has stolen market share from takeaway rivals to hit 50 per cent market share in New South Wales.
The success of the "Loose Change" strategy was particularly apt for the Australian market as opposed to countries where the currency is dominated by notes.
Insiders believe McDonald's benefited from coins being in high circulation in Australia and, importantly, change with high value - such as $1 and $2 coins.
Earnings released in the US overnight for the world's biggest restaurant group showed improvements in Australia helped drag the company's Asia Pacific, Middle East, Africa sales results into positive territory, notching up a 0.6 per cent gain in comparable sales for November after ongoing weakness in Japan.
Analysts were tipping that McDonald's sales in the area would retreat as much as 1 per cent for the period as continued concern over the global and regional economy kept consumer confidence down and shoppers shied away from eating out or spent less when they visited.
McDonald's took Wall Street by surprise, with overall sales beating expectations and its flagship US business booking comparable November sales growth of 2.5 per cent on the strength of its breakfast business and value offerings.
McDonald's Australia chief marketing officer Mark Lollback said 2012 had been a "great year" for the chain. "It was a slow start, but basically from March, April and on we have had a very strong year from when we launched the 'Loose Change' menu," he said.
Mr Lollback said the "Loose Change" menu was designed to target budget-focused customers with good-value meals and drinks, while also taking advantage of the idea that coins did have some value.
"Everyone has coins, they are sitting around, aren't perceived to have much value and we wanted to say to our loyal customers 'well, actually, that stuff that rattles around and doesn't mean much to you, that is actually worth something at McDonald's and we can give some great-tasting food and drink with those coins'."
Mr Lollback said McDonald's had increased its market share within the quick-service retail sector in 2012, hitting 50 per cent share in NSW.
Other fast-food chains have performed well during the year. Domino's reported comparable sales growth of 6.6 per cent across its Australian and New Zealand pizza stores in 2011-12, while Collins Foods, which operates KFC restaurants and Sizzler outlets in Australia, reported 3.6 per cent comparable sales growth at its KFC network in the six months to October.
Frequently Asked Questions about this Article…
The 'Loose Change' menu was a value-meal initiative in Australia that offered low-cost food and drinks targeted at budget-focused customers. It succeeded partly because coins (notably $1 and $2 coins) are widely used in Australia, so customers could easily spend spare change. McDonald’s marketed the idea that small coins sitting around the house were actually worth something, helping drive traffic and sales.
The Loose Change menu helped resuscitate McDonald’s earnings during the calendar year and contributed to a strong run from March and April onwards. According to McDonald’s Australia, the local chain increased its share of the quick-service market and reached about 50% market share in New South Wales.
Yes. Earnings released in the US showed that improvements in Australia helped pull McDonald’s Asia Pacific, Middle East and Africa (APMEA) sales into positive territory, with a 0.6% gain in comparable sales for November despite ongoing weakness in Japan.
McDonald’s surprised Wall Street by beating sales expectations overall. Its flagship US business recorded comparable November sales growth of 2.5%, driven by strength in its breakfast business and value offerings.
Analysts had been tipping that McDonald’s sales in the area could retreat by as much as 1% for the period due to weak consumer confidence and cautious spending. However, stronger Australian performance—helped by initiatives like Loose Change—helped turn regional results positive instead of falling.
Alongside the Loose Change menu, other offers and McDonald’s Olympic sponsorship helped attract customers and steal market share from takeaway rivals, supporting the chain's strong performance in Australia during the year.
Other chains also posted solid results: Domino’s reported comparable sales growth of 6.6% across its Australian and New Zealand pizza stores in 2011-12, while Collins Foods—which operates KFC restaurants and Sizzler outlets in Australia—reported 3.6% comparable sales growth at its KFC network in the six months to October.
The article highlights that targeted value menus and locally tailored marketing can boost customer traffic and lift regional sales, sometimes offsetting weakness elsewhere in a global business. For investors following fast-food companies, it shows the importance of regional strategies, local consumer habits (like coin usage), and promotional execution in driving comparable sales.
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