McDonald's announces $US8.5b makeover, menu overhaul

McDonald's says it will spend $US8.5 billion over the next decade to modernise its restaurants globally.

Fast-food traffic in many markets, including the US, is flat, so for McDonald's to continue to grow it has to grab share from competitors and improve restaurant productivity, CEO Chris Kempczinski said at a meeting with investors at the company's Chicago headquarters.

McDonald's wants to automate more tasks, like inventory and scheduling, and improve kitchen operations.

"The winners will be the companies that create more demand and deliver it more efficiently," Kempczinski said.

On the product side, McDonald's said hand-breaded chicken, which has rolled out at 10,000 restaurants in Asia and a handful of restaurants near Chicago, has boosted sales and quality ratings. The company plans to expand its testing to more markets in the US and Ireland next year.

McDonald's also plans to introduce grilled chicken sandwiches and wraps in the US and other markets and experiment with products like egg bites and bowls to meet the needs of customers who are seeking more protein and varied portion sizes.

Skye Anderson, the president of McDonald's USA, said approximately 30 million Americans are now using GLP-1 weight loss drugs, and they're seeking smaller, more protein-packed meals as a result. But the company's research indicates that 60 million Americans are actively seeking more protein in their diet.

"This is an opportunity. We need to keep giving them more reasons to make McDonald's their first choice," Anderson said.

McDonald's said the restaurant modernisations include lockers to handle delivery orders, more visible coffee preparation areas to enhance quality perceptions, bigger play areas and improved kitchen layouts.

Scales to help ensure order accuracy - which are already in use at 10,000 restaurants globally - will be in 20,000 restaurants by 2028, McDonald's said.

The company is deploying its ArchIQ system, developed with Google, that improves order accuracy with artificial intelligence and automates tasks like inventory management and scheduling.

Archy could eventually reduce at least 50 labour hours per week in a typical McDonald's, Chief Financial Officer Ian Borden said, adding the intention was not to reduce staffing.

Kempczinski said customers have responded positively to Archy in testing because it helps make their orders more accurate.

"It's not AI is bad or AI is good. We try to be really thoughtful about how we use it," he said.