McDonalds Turn-Around Metrics

I wanted to ask you, Larry, about the outcomes of this three-year journey that you were on at McDonalds?

The outcome was amazing. I’ve never experienced anything like it. I told you that in October we launched the new advertising in October, but we launched more than that, but most visible was the launch of I’m lovin’ it worldwide, simultaneously on the same day in the same hour we rolled out I’m lovin’ it around the world. It started in Australia and New Zealand and in Asia. Then it rolled out around the world with the time change. We got 119 countries aligned to launch the new campaign with the new strategy on the same day. That had never been accomplished I’m told by any company ever before or ever since. Because we had our people P first, we generated so much enthusiasm getting people that point was not difficult. When people want to do something, they’re easily led to do what they want to do. Investing in generating internal pride, enthusiasm, allowed us to do something that had never been done. Because it was so dramatic, we were covered in the news media. CNN covered it on CNN domestic and CNN international. We were on every big news channel. The BBC even talked about advertising and played our song and played the music. We were in entertainment media because Justin Timberlake was involved. It was unbelievable. I don’t know, we never tried to quantify nor could we how much free advertising, but not only was it free advertising, it was true promotion. It helped to elevate the brand. Elevated in the customer’s mind. It became cool. Justin Timberlake then decided to actually write complete.

The song for the commercial is only 20 seconds. He decided to turn it into a fully record and put it on his website. People actually bought the song. That spread to several countries in the world. In the UK, I’m lovin’ it because one of the most famous advertising expressions, according to one survey, it was number two to just do it as an expression that people would use in everyday language. It was amazing. What was amazing by our new metric, more customers, more often, more loyal, more revenues, more profit, is the needle started to move within three months. By six months, April of that convention in Orlando where unfortunately Jim Cantalupo died, we were already celebrating a turnaround. Six months showing up on our business metrics. Now, it was turning around means we hadn’t achieved what we wanted to achieve, but we had bottomed up and the numbers were going north instead of south. Jim was obviously going to host the biggest convention and the biggest story. The business press covered it. One analyst called it the most historic turnaround of any brand ever. To do that in six months. Now, I had a 36-month plan, so I didn’t say, we’ve now done it, I’m gone. I had a 36-month contract, I was going to live it out. When I left, the stock had gone from $13 to $65. From a previous high of 45. You want to produce financial results, don’t focus on financial results, focus on the business, the financial results will happen.

What changes did you make to the structure of marketing spend?

I don’t know that we changed a lot. We changed our attitude. Promotion meant every touch point with the customer must elevate the brand in the customers’ mind. I viewed restaurant redesign as marketing. We redid our whole packaging worldwide to be consistent with our new brand image. We were in the Olympics that one year and we changed how we approached the Olympics. It just depended on every opportunity. The philosophy was very consistent. Advertising is not the only way you elevate. The unfortunate view of advertising agencies is brand equity and brand image is created through advertising. Everything else doesn’t matter. What’s the ad budget? It’s what the promotion budget is. It’s all promotion under our new definition of promotion. It’s one budget. I’m not going to change that, whether it’s advertising, whether it’s package design, whether it’s how you answer delivery, whether it’s store design, whether it’s digital, whether it’s delivery. It’s all designed to elevate the brand experience in the customer’s mind.

It’s really much more holistic approach to brand management?

Absolutely.