McDonald’s UK business needs to step up its marketing execution as it faces an “under pressure” consumer and stiff competition on value, says its global CEO.
Chief executive Chris Kempczinski outlined the brand’s challenges in what has traditionally been one of its strongest markets. While global comparable sales grew marginally by 0.4% in the business’s 2024 fourth quarter, they fell in the UK, which has been one of its “strongest performers”.
“We’re not seeing the UK business perform, certainly at a level that we’re used to historically,” he said, speaking to investors today (10 February).
He attributed the underperformance to the ongoing cost of living crisis, which is driving families to “economise”, negatively impacting McDonald’s. Value perceptions are, therefore, crucial, for the brand, he noted, adding that this is an area where it is facing significant competition.
We need to have better marketing in the UK, I think we, frankly, didn’t have the level of marketing execution in the back half of last year that we’re used to.
Chris Kempczinski, McDonald’s
“We have a very strong local competitor [in the UK], who’s been very aggressive from a value standpoint, particularly on breakfast” he stated.
While he did not specifically name a competitor, UK bakery brand Greggs has been keenly focused on both the breakfast occasion and value. Last year, Greggs reported it had overtaken McDonald’s in the breakfast occasion, and last month, it said it maintained market share and remained “customers’ number one destination for breakfast”.
Over the past year, McDonald’s has seen its value perceptions decline, from 19.9 in the 52 weeks ended 9 February 2024, to 17.4 this year, according to YouGov BrandIndex. Greggs, on the other hand, has improved value perceptions to 37.8 in the current period, up from 36.9 last year.
‘One, two, punch’ approach
As well as “aggressive” competition and subdued consumer sentiment, Kempczinski asserted that McDonald’s marketing had not been up to scratch in the latter part of 2024.
“We need to have better marketing in the UK. I think we, frankly, didn’t have the level of marketing execution in the back half of last year that we’re used to,” he said.
To succeed in driving sales growth, McDonald’s needs to have a “one, two, punch” approach, where it backs up a strong value proposition with its marketing programmes and innovation, he said.
Having strengthened its long-running Savers platform, refocused on the Happy Meal, and introduced a £5 meal deal, Kempczinski said he is “very confident” that the UK business now has a strong value proposition. Its focus this year will be having its marketing “kicking in” to ensure those value offerings are cutting through with consumers.
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He compared the issues the business is currently facing with what it had previously dealt with in its French market, and that it has now tackled successfully. Activities in France include its Chicken Big Mac activations, which Kempczinski described as “great marketing execution”.
It also saw success from its marketing activities in the US. The chain saw improved customer traffic as the 2024 year went on.
“These results were driven by our marketing efforts to amplify traffic drivers,” Kempczinski said.
