McDonald’s Bets on Salad Success in Europe

McDonald’s Corp. is betting that European women will gobble up entree-sized salads with the same gusto as their American counterparts.

McDonald’s Corp. is betting that European women will gobble up entree-sized salads with the same gusto as their American counterparts. The world’s largest fast-food company, which last month spooked the market on concern over softening European sales, on Wednesday assured investors that its largest foreign market is on track for solid sales growth. In Europe, where McDonald’s operates nearly 6,200 restaurants, the company is expanding offerings of entree-sized salads called “Salads Plus,” which are similar to the highly successful Premium Salads line introduced in the United States in March 2003. Premium Salads, which feature Newman’s Own dressings, have helped McDonald’s turn around flagging U.S. sales. In February, U.S. sales grew at their highest comparable sales rate in 30 years. “The Salads Plus menu is an exciting example of our efforts to increase relevance,” Chief Financial Officer Matthew Paull told investors during a conference call to discuss first-quarter results. Shares of McDonald’s were up about 2 percent on Wednesday afternoon, a day after the company reported a sharp rise in first-quarter profit. “The advertising campaign for Salads Plus will be a very significant marketing initiative in 2004,” Paull said. “It is also the first McDonald’s campaign in Europe targeted directly to women.” The advertising will carry the tagline: “new food, new people.” The salads, now available in Britain and Germany, will be introduced in France in May. Sixteen European countries will offer the salads by the end of the summer, Paull said. All will use the same packaging and advertising to promote the program. “While still very early, initial results are encouraging,” he said. Another U.S. menu idea that may translate well overseas is McDonald’s all-white-meat Chicken McNuggets, which is also helping to drive U.S. sales growth. McDonald’s expects to introduce the product in the Netherlands, Britain and Sweden, in the second quarter. In its earnings statement late on Tuesday, McDonald’s new chief executive, Charlie Bell, said that Europe’s sales trends have “improved significantly” in April. Bell, the company’s former chief operating officer, assumed leadership of McDonald’s last week after Chief Executive Jim Cantalupo died unexpectedly. Shares of McDonald’s were up 52 cents or 1.9 percent at $27.72 on Wednesday afternoon on the York Stock Exchange. Analysts said the rally was fueled in part by investor relief that softness in March European sales was temporary. “March was an anomaly,” said David Kolpak, an analyst with Victory Capital Management, which owns 3.81 million McDonald’s shares. “It’s always tough to predict, but I have high hopes, given the power of their marketing.”(Source: Reuters Health, April 2004)