Grimace shakes help send McDonald's sales surging

MIAMI -- When McDonald's introduced a limited-edition purple shake in honor of Grimace's birthday, it probably didn't expect the item to go viral on TikTok quite like it did: With TikTokers showing themselves sipping the dessert drink and then, soon after, writhing in mock pain or playing dead.

But the mini horror films inspired people to buy shakes (if only to make more videos). And thanks to Grimace's grim influence, sales in the second quarter spiked.

"This quarter, the theme is — well, if I'm being honest, the theme was Grimace," said CEO Chris Kempczinski during an analyst call Thursday. "Grimace has been everywhere in the past few months … this viral phenomenon is yet another proof point of the power of marketing at McDonald's today."

Kempczinski added that the brand's marketing efforts have led to higher food quality scores. "The more customers love our brand, the more they love our food," he said.

In the United States, sales at McDonald's locations open for at least 13 months jumped 10.3% in the quarter ending on June 30. Grimace's birthday, and the kickoff date for the special meal and shake McDonald's offered to celebrate, was on June 12. Globally, sales at restaurants open at least a year jumped 11.7%, thanks largely to growth in China, the company noted. Total sales rose 14% in the quarter.

In a statement discussing its second-quarter results, McDonald' said that growth in the US could be attributed to "culturally relevant brand and marketing campaigns," along with menu price increases as well as growth in delivery, among other things.

Grimace's birthday "quickly became one of our most socially engaging campaigns of all time," said CFO Ian Borden during the call, referring to it as "a true demonstration of how the power of our brand emerges in organic and creative ways in our fans."

The campaign "contributed to the strong double-digit comparable sales growth for the quarter in the US," he said.

When McDonald's introduced the special products for Grimace in early June, it wasn't all about the shake. The Grimace Birthday Meal also came with McNuggets or a Big Mac and fries. And as part of the celebration McDonald's also launched a video game and Grimace merchandise.

"Grimace's Birthday is all about paying homage to the amazing, fun moments we all share," Tariq Hassan, chief marketing and customer experience officer at McDonald's USA, said in a statement about the occasion. "Grimace is the perfect lovable icon to have McDonald's meet our fans at the intersection of nostalgia and culture."

But in TikTok videos where people wish Grimace a happy birthday before sampling the shake, Grimace is not presented as a lovable icon. He seems more like a vengeful monster, a murderous … whatever Grimace is.

McDonald's acknowledged the situation, in late June tweeting an image of Grimace and writing "meee pretending i don't see the grimace shake trendd," and later, when it was time for Grimace to return to Grimace Island, tweeted "u made me feel so specialll ty."

The fast food chain is particularly adept at launching promotions that resonate with customers. McDonald's Cactus Plant Flea Market Box, aka the adult Happy Meal, performed so well in October that it lifted restaurant traffic in fast food overall, taking it from negative to positive, according to data from Placer.ai, which uses location data from mobile devices to estimate visits.

New restaurant concept coming

As it looks ahead, McDonald's is planning new types of locations.

Next year, McDonald's plans to start testing a new concept called "CosMc's" in a handful of locations. "CosMcs is a small format concept with all the DNA of McDonald's but its own unique personality," Kempczinski said, adding that McDonald's will share more details during its investor day at the end of this year.

CosMc, like Grimace, is a McDonald's character. He is an alien.

Looking at its presence in the US more broadly, "our footprint reflects what the population looks like probably 20 or 30 years ago," said Kempczinski. "There's a number of places around the US where we are significantly underdeveloped relative to where the population exists today. That opens up for us a whole bunch of development opportunities for us to go after."

As part of that, McDonald's is looking at opening smaller format stores, ones that don't need much space for on-premise dining, now that delivery is so popular. In the past, those options were essentially "off limits," he said.

The plan comes at a time when consumers are nervous about spending.

"There is certainly concern with the US consumer that shows up in their sentiment, " Kempczinski said during the call. But, he added, McDonald's is still in a good spot.

"But our business, and particularly I think our value positioning in the market, has put us into a good position to be able to weather that." The company has seen evidence of people trading down from full-service or fast casual restaurants into McDonald's business, he said.