What companies can learn from McDonald's about staying culturally relevant
McDonald's unveiled a series of clever marketing and promotional strategies that garnered social media attention and helped it gain traction from Gen Z customers.
McDonald’s released its Q2-2023 earnings and beat analyst expectations on sales and profitability. Placer.ai data showed that McDonald’s US customer traffic growth at 8.4% in Q2 beat the national average for fast-food chains at 1.2%. The key driver behind McDonald’s’ superstar performance was savvy promotion and marketing strategies that drove customer sales both in-store and digitally.
To provide some context to the reader – consumer goods companies have faced macroeconomic challenges in the form of consumer belt-tightening measures since 2022 due to high inflation and interest rates. Additionally, these companies primarily relied on pricing increases to offset high input cost inflation. McDonald’s stood out from the rest by focusing on brand building, gaining customer loyalty, and forging strategic partnerships to grow sales.
Promotion strategy
The burger chain introduced the limited-edition Grimace Meal Deal in June, to celebrate the birthday of its iconic mascot. Its photogenic purple milkshake drove ‘nostalgic’ customer sales higher. TikTok was rife with satirical reels where users turned videos of themselves trying the milkshake into a horror scene. As per McDonald’s, this viral trend drove millions in social media engagements and mentions. The Grimace shake boosted US comparable sales by 10% in Q2.
Marketing
The Grimace deal is one of the many examples of the firm’s marketing prowess. Its #RaiseYourArches ad campaign released in January 2023 depicting office workers conspiring to meet at a McDonald’s restaurant won several media awards. The ad showcased that non-verbal signals suffice in hinting at a hangout at McDonald’s, underlining customer affinity to the brand. The ad received millions of views on TikTok and generated thousands of Instagram posts as McDonald’s partnered with influencers across sectors to gain traction.
Loyalty program
These strategies fall within McDonald’s Accelerating the Arches campaign, launched in 2020 and with a focus on:
Maximizing marketing (Brand, Affordability)
Committing to core products (Burger, Chicken, Coffee)
Doubling down on the 4Ds (Digital, Delivery, Drive Thru, Development)
Within goal 3, the firm launched its loyalty program MyMcDonald’s Rewards in 2021. It encourages customers to use the McDonald’s app to place direct orders and earn points. After hitting certain point milestones, customers can redeem them on a wide variety of items on the menu and redemptions can be made even after small spending. This offering has won McDonald’s customer loyalty through repeat orders and points collection. McDonald’s hit record-high sales at the time in 2021 of USD 112 billion and global sales grew 11% over a two-year pre-COVID comparison in Q4-2021, driven by the rewards program.
Points can only be collected by placing an order through the app and by using the Drive Thru, Kiosk, or Counter channels. These channels have provided access to crucial customer data to know more about their preferences, localize mobile offers based on customer location and personalize the shopping experience. As of Q2-2023, digital sales comprise 40% of systemwide sales in McDonald’s top 6 markets up from 20% in 2020.
Partnerships
Additionally, McDonald’s has forged strong partnerships with media personalities and influencers to generate buzz and grow digital sales. For example, it partnered with Latin reggaeton artist J Balvin, American rapper Travis Scott and the K-Pop band BTS in 2020 and 2021 by introducing limited edition and signature McDonald’s meals loved by these artists. The Travis Scott Meal launched in September 2020 helped McDonald’s grow its US app downloads by 11% week on week in the first week of the promotion. Average daily active users of the app during the J Balvin promotion in October 2020 were up 23% compared to August 2020.
All these partnerships have helped it connect to younger customers across geographies and cultures and the limited-edition nature helped create hype as the meals are only offered for a short duration. During the J Balvin promotion, McDonald’s promoted the meal on YouTube to capture Balvin’s Spanish-speaking audience.
Tough macroeconomic conditions necessitate ingenious thinking to continue customer sales. Firms often react with broad-based cost cuts but this example shows the importance of strategic spending that focuses on the customer, continuously building the brand, especially during tough times, and staying culturally relevant for the customer.
Call to action: Businesses and strategists should identify winning themes from this example across:
Brand building especially during tough macro conditions through promotions and advertisements
Winning customer loyalty by offering deals customers cannot ignore
Trapping customers to your channel ecosystem by offering rewards that provide valuable insights into their preferences
Actively engaging on social media and partnering with relevant influencers to stay top-of-mind for customers
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