You Won't Recognize McDonald's by This Time Next Year

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McDonald's Reports Second Quarter Earnings and Record Sales Reflecting Revitalization Progress
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McDonald's (MCD) may never be the same if new initiatives to drum up sales and increase customer satisfaction pan out.

The world's largest restaurant chain announced some bold initiatives late last week during an investor presentation. How does adding a third drive-thru window and replacing prep tables with larger areas that can accommodate a broader variety of fresh ingredients sound?

If that doesn't seem like the McDonald's you know today, that's pretty much the point.

After nearly a decade of consistent growth in same-restaurant sales, the master burger flipper proved it was mortal 13 months ago. The chain's monthly metrics have been mixed since then, leading investors to wonder why folks aren't going to McDonald's the way that they used to. Everything from chicken wings to premium chicken wraps to moving up its annual Monopoly promotion haven't panned out, and now the chain is going to get aggressive.

Closing a Door, and Opening a Window

One of the more interesting developments will be the third drive-thru window at new or rebuilt locations next year. The Fast Forward Drive-Thru update doesn't involve adding a third order screen. Things seem complicated enough at the recently updated units that have dual order stations for drivers. This will be a third window added beyond the first window where customers pay and the second window where they typically pick up their food. The third window will come into play when a customer places a highly customized order for items that take additional time to prepare.

Instead of inconveniencing drivers behind that car by having to wait longer than they have to -- or making things more unpleasant for the person placing the order by asking to pull off to the side of the restaurant -- the third window will be an attended pick-up location.

A third window probably didn't seem necessary back when the menu was as simple as the ones now at Five Guys or In-N-Out. However, now that folks can order everything from fancy McCafe Iced Caramel Mocha to McWrap Sweet Chili Grilled Chicken, speed and execution are being tested. A third window isn't the ideal solution, but it does make things less of an inconvenience for the person placing the order, those waiting behind him, and the employees who currently have to leave the restaurant to hand over complicated orders.

Prep Rally

The bolder initiative -- and one that will be incorporated across all the more than 14,000 domestic locations -- is a high-density prep table that will have room for dozens of fresh ingredients. The push here is to offer broader flavors for the fast food behemoth's sandwich options.

McDonald's is already testing a "build your own" sandwich at a California location with the new prep area, allowing customers to choose from 20 different toppings. Patrons can order off of two iPad stations with employees standing by to help out. Incorporating touchscreen tablets across the entire chain isn't likely in the near term, but the high-density prep tables are a no-brainer.

Fast food operators have been losing traffic to fast casual chains that offer quick-service meals that are higher in quality, with a relatively minor sacrifice of speed. Offering a wider variety of fresh ingredients would help McDonald's offer more taste bud-tantalizing options. The test location even allows guests to have their burger "chargrilled to order."

As long as McDonald's can do this without messing up too many orders or slowing down progress, the Fast Forward Drive-Thru initiative and the rollout of new prep tables next year could change the way consumers approach the now tired burger champ.

If McDonald's is right, you may never settle for Chicken McNuggets again.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends McDonald's. The Motley Fool owns shares of McDonald's. Try any of our newsletter services free for 30 days.


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