THE BLOG

Does Canada Have McDonald's Solution?

03/09/2015 02:48 pm ET | Updated May 09, 2015

Well, that didn't work. McDonald's Corp. reported a whopping 4 percent decline in comp sales for February, the month it rolled out the sweet "Choose Lovin'" campaign. Even those who did don't seem to have chosen McDonald's as well.

So now what? McDonald's can either decide it's in the middle of a two-year "correction" that will result in a slightly smaller but stable U.S. operation or it can continue its attempt to rebuild sales and consumer attitudes. If it wants to do the latter, it might look at its Canadian operation for pointers.

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McDonald's Canada last week began a new "Welcome to McDonald's" campaign. It drops the "Please just listen to us for a minute" desperation of the "Our food. Your questions." campaign that ran first in Canada and then in U.S. and it avoids the Hello-Kitty-cuteness of the "Lovin'" ditties. Instead, the new advertising reverts to what worked in 1980s: Positioning McDonald's as a friendly, convenient, affordable place to go, meet and eat. No "What's really in McNuggets" guilt trips. No "Yes, we have an app!" Millennial nonsense. No "Yes, we have customization!"

All that is fine. But a better positioning for McDonald's, one that might build sales here as in Canada, is the one embodied in of the new TV spots this way: "Is there a place that makes room for everybody? Somewhere that welcomes you no matter what your name is, where you're from or what you do. Somewhere to catch up with friends. Or with the world. To share a meal or just a laugh. A place to be with your family, whatever that may be. "Is there a place that connects with those around you and that will accept you for who you are. I work at that place."

McDonald's agency N/A drove across Canada and filmed vignettes with 400 people. As Hope Bagozzi, senior director of creative and digital innovation for the chain, says in the introductory video in the series, "This campaign is absolutely all about people. We get to see the humanity, the smiles, the warmth, the values,, the caring. And, you know, that's what makes people so great."

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The campaign leverages McDonald's unassailable strength: Its restaurants are everywhere. They are in every neighborhood. Canada makes it a positive.

It's difficult to precisely gauge how well McDonald's 1,400-store Canadian operation has done in contrast to the U.S. McDonald's Corp. puts results for Canada--along with Caribbean, Central America and South America--in a "Other Countries & Corporate" (OCC) category in SEC filings. For 2014, the OCC category posted a 6.6 percent comp sales gain, compared with the -2.1 percent decline for the U.S. Much of that may have come from Arcos Dorados the franchisee that operates 2,070 restaurants in the area. It average an 8 percent comp-sales increase in the first three quarters. It reports Q4 and full-year earnings on March 17.

For February, disastrous for McDonald's U.S, the company reported, "Strong comparable sales in McDonald's Other Countries & Corporate segment contributed positively to the Company's global comparable sales performance for the month."

Even if Arcos Dorados has accounted for much of the OCC gain, Canada clearly isn't dragging it down. It's doing better than the U.S. and its performance is worth analyzing by ne CEO Steve Easterbrook and his corporate staff.

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Canada has done well by heavily promoting coffee--often with giveaways--to build breakfast sales as it battles Tim Hortons for morning supremacy. The absence of biscuits, not a Canadian tradition, simplifies the breakfast menu. Canada kept the Angus Third Pounder line after the U.S. stopped it, giving it a large burger with which to compete with the "better burger" brands. And it has created a more inventive list of premium-price items, such as the Jalapeňo Mighty Angus and Steak 'n Caesar McWrap.