McDonald’s dollar menu replacement fuels industry price war

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McDonald’s Corp., the world’s largest restaurant chain, unveiled its new value-priced menu on Monday, aiming to keep its lead in an industry that’s increasingly racing for the bottom. The lineup, set to go live on January 04, includes items such as chicken tenders, Happy Meals, sodas, triple cheeseburgers and the Egg McMuffin.

With visits to U.S. fast-food restaurants seen remaining flat next year, the major chains are jockeying for position and announcing discounts to keep diners’ attention. Taco Bell, the Mexican-themed chain owned by Yum Brands, is responding with what it calls its “biggest value push in company history.“

The new offering at McDonald’s, which will run alongside the regular menu at restaurants, is a balancing act for the Golden Arches. If items are priced too high, customers feel like they’re getting ripped off and head to competitors. But if the prices are too low, McDonald’s own franchisees will do the grousing.

That was the case with the company’s Dollar Menu, which was phased out in 2013. McDonald’s operators thought it weighed too heavily on profit margins, but the menu was popular with customers. And its absence was felt. The demise of the Dollar Menu was seen as a contributor to a sales slump that lasted two years.

This time around, McDonald’s thinks it has a formula that can keep franchisees happy. More than 90 percent of restaurant owners have signed up to participate in the program, according to Chris Kempczinski, who runs the company’s U.S operations.

“You have to make sure it’s something we can sustain,“ he said in an interview.

Andy Barish, an analyst at Jefferies, upgraded the stock to “buy” on Tuesday and raised his price target to $200, in part because the new value menu will help the chain continue to gain customers.

McDonald’s shares climbed as much as 2 percent to $174 in New York Tuesday, in the biggest intraday gain in more than two months. The stock had already climbed 40 percent this year through Monday.

McDonald’s announced in October that it was planning the menu, though it didn’t give details until Monday. The idea is to shore up a comeback built on the success of all-day breakfast and more targeted discounts like McPick 2 for $5.

When the new menu hits next month, customers will be able to get a handful of options for $1, $2 or $3. The cheapest items include sodas, McChicken sandwiches, a sausage burrito and cheeseburgers. The sausage McMuffin with egg is on the menu for $3, alongside a new chicken sandwich. And the company’s buttermilk chicken tenders, which sold out last month after a brief run, are returning to the menu – with an order of two costing $2.

One popular item that’s absent is french fries. Kempczinski said the company spent months trying to figure out the best way to construct the new menu and ultimately decided it was compelling without fries.

“We didn’t need fries to make it attractive,“ he said.

Taco Bell, meanwhile, is seeking to remain in the mix as McDonald’s and its burger rivals at Wendy’s and Burger King increasingly look for ways to appeal to the core fast-food customers looking for discounted fare.

Shares of owner Yum were little changed Monday at $83.32.

Taco Bell is reminding customers that it has a $1 menu with 20 items, and this lineup will be boosted by 20 more limited-time offerings in 2018. The menu will include nacho French fries and a new “stacker” quesadilla – beef and cheese in a folded flour tortilla.

“I think a lot of places begrudgingly try to figure out what food to serve at these price points,“ Brian Niccol, the chain’s chief executive officer, said in an interview. “We choose to lean into it.“

GM could launch its own autonomous ride-hailing service as early as 2019

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A General Motors executive said Friday that the company is rushing to launch autonomous vehicles for a ride-hailing service that could compete with Uber and Lyft, the latest example of how aggressively the legacy carmaker is pushing to stay at the forefront of automotive innovation.

GM says those robotic vehicles – battery-powered Chevy Bolts that are being developed by Cruise Automation, a subsidiary – will appear on American streets without a driver in 2019.

The company said vehicles will not have human backup drivers.

The ambitious timeline could place GM in an enviable position: with the unique ability to provide existing ride-hailing companies like Lyft or Uber with a growing fleet of autonomous vehicles or, better yet, to unleash their own service. Using their vast dealership networks, nationwide influence and manufacturing prowess, a GM-driven ride-hailing service may be positioned to leapfrog the Silicon Valley startups that have been trying to disrupt the auto industry. GM has invested $500 million in Lyft, which did not respond to a request for comment.

“We have been committed since we first started talking about our efforts and when we purchased a portion of Lyft to building self-driving cars that operate in a ride-sharing environment,“ Ray Wert, head of Storytelling and advanced technology communications at General Motors, said. “We’re very happy with how the technology is progressing and given that we feel we have the capability to move forward with one partner, many partners or no partners at all.“

“We will pick the solution that helps us achieve our mission of safely developing and deploying self-driving cars at scale,“ Wert added.

GM hasn’t said where it plans to launch autonomous ride-sharing fleets or how many vehicles they might include, but the company’s chief executive Mary Barra, said this week that they believe the “biggest opportunities are in the coastal areas.“

The car-maker is already testing autonomous vehicles on busy San Francisco streets – as well as in Phoenix and its hometown, Detroit. At those locations, engineers have a chance to refine the vehicle’s self-driving capabilities and the still-precarious rider experience ahead of the ambitious deadline. Instead of testing its vehicles on a closed course or a “simple suburban setting,“ Wert said, the company has opted to test the vehicles in an environment that resembles where they’ll actually be deployed. Real-world conditions, company officials believe, accelerate the technology and unlock economic opportunity.

“That’s why we’re committed to the aggressive timelines that we’re committed to,“ he said. “The faster we can do that the greater impact we can have on society.“

GM is far from the only traditional automaker investing in autonomous technology and ride-hailing services. Last month, Volvo announced plans to provide Uber with up to 24,000 vehicles for a fleet of driverless taxis that are expected to appear on American streets in 2019.

Google’s Waymo, German automaker Daimler and Ford are also developing self-driving cars that would be available for ride-sharing services.

GM considers autonomous vehicles the “biggest business opportunity since the creation of the internet,“ a market with with multitrillion dollar potential that goes hand-in-hand with electric vehicles.

In a note to clients Friday, Barclays analyst Brian Johnson wrote that instead of the “overly-aggressive timelines pushed by Tesla,“ GM’s ability to launch autonomous vehicles for a ride-sharing service now “seems possible.“

“The tech is real,“ he wrote, noting that GM’s vehicles will be “monitored by humans at a control center” and the company will benefit from their aggressive timeline.

After joining a test-drive in one of the prototypes, Johnson said the car was “impressive.“

“There were no disengagements,“ he wrote. “While the vehicle drove conservatively (i.e., taking time, strictly obeying speed limits, checking carefully at both sides before turning at an intersection), we’d also note that the driving environment was quite complex.“

Uber Concealed Cyberattack That Exposed 57 Million People’s Data

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Hackers stole the personal data of 57 million customers and drivers from Uber Technologies, a massive breach that the company concealed for more than a year. This week, the ride-hailing company ousted Joe Sullivan, chief security officer, and one of his deputies for their roles in keeping the hack under wraps.

Compromised data from the October 2016 attack included names, email addresses and phone numbers of 50 million Uber riders around the world, the company told Bloomberg on Tuesday. The personal information of about 7 million drivers were accessed as well, including some 600,000 U.S. driver’s license numbers. No Social Security numbers, credit card details, trip location info or other data were taken, Uber said.

At the time of the incident, Uber was negotiating with U.S. regulators investigating separate claims of privacy violations. Uber now says it had a legal obligation to report the hack to regulators and to drivers whose license numbers were taken. Instead, the company paid hackers $100,000 to delete the data and keep the breach quiet. Uber said it believes the information was never used but declined to disclose the identities of the attackers.

“None of this should have happened, and I will not make excuses for it,“ Dara Khosrowshahi, who took over as chief executive officer in September, said in an emailed statement. “We are changing the way we do business.“

Hackers have successfully infiltrated numerous companies in recent years. The Uber breach, while large, is dwarfed by those at Yahoo, MySpace, Target, Anthem and Equifax. What’s more alarming are the extreme measures Uber took to hide the attack. The breach is the latest explosive scandal Khosrowshahi inherits from his predecessor, Travis Kalanick.

Kalanick, Uber’s co-founder and former CEO, learned of the hack in November 2016, a month after it took place, the company said. Uber had just settled a lawsuit with the New York attorney general over data security disclosures and was in the process of negotiating with the Federal Trade Commission over the handling of consumer data. Kalanick declined to comment on the hack.

Sullivan spearheaded the response to the hack last year, a spokesman told Bloomberg. Sullivan, a onetime federal prosecutor who joined Uber in 2015 from Facebook, has been at the center of much of the decision-making that has come back to bite Uber this year. Bloomberg reported last month that the board commissioned an investigation into the activities of Sullivan’s security team. This project, conducted by an outside law firm, discovered the hack and the ensuing cover-up, Uber said.

Here’s how the hack went down: Two attackers accessed a private GitHub coding site used by Uber software engineers and then used login credentials they obtained there to access data stored on an Amazon Web Services account that handled computing tasks for the company. From there, the hackers discovered an archive of rider and driver information. Later, they emailed Uber asking for money, according to the company.

A patchwork of state and federal laws require companies to alert people and government agencies when sensitive data breaches occur. Uber said it was obligated to report the hack of driver’s license information and failed to do so.

“At the time of the incident, we took immediate steps to secure the data and shut down further unauthorized access by the individuals.,“ Khosrowshahi said. “We also implemented security measures to restrict access to and strengthen controls on our cloud-based storage accounts.“

Uber has earned a reputation for flouting regulations in areas where it has operated since its founding in 2009. The U.S. has opened at least five criminal probes into possible bribes, illicit software, questionable pricing schemes and theft of a competitor’s intellectual property, people familiar with the matters have said. The San Francisco-based company also faces dozens of civil suits. London and other governments have taken steps toward banning the service, citing what they say is reckless behavior by Uber.

In January 2016, the New York attorney general fined Uber $20,000 for failing to promptly disclose an earlier data breach in 2014. After last year’s cyberattack, the company was negotiating with the FTC on a privacy settlement even as it haggled with the hackers on containing the breach, Uber said. The company finally agreed to the FTC settlement three months ago, without admitting wrongdoing and before telling the agency about last year’s attack.

The new CEO said his goal is to change Uber’s ways. Uber said it informed New York’s attorney general and the FTC about the October 2016 hack for the first time on Tuesday. Khosrowshahi asked for the resignation of Sullivan and fired Craig Clark, a senior lawyer who reported to Sullivan. The men didn’t immediately respond to requests for comment.

The company said its investigation found that Salle Yoo, the outgoing chief legal officer who has been scrutinized for her responses to other matters, hadn’t been told about the incident. Her replacement, Tony West, will start at Uber on Wednesday and has been briefed on the cyberattack.

Kalanick was ousted as CEO in June under pressure from investors, who said he put the company at legal risk. He remains on the board and recently filled two seats he controlled.

“While I can’t erase the past, I can commit on behalf of every Uber employee that we will learn from our mistakes,“ Khosrowshahi said in the emailed statement.

Uber said it has hired Matt Olsen, a former general counsel at the National Security Agency and director of the National Counterterrorism Center, as an adviser. He will help the company restructure its security teams. Uber hired Mandiant, a cybersecurity firm owned by FireEye, to investigate the hack.

The company plans to release a statement to customers saying it has seen “no evidence of fraud or misuse tied to the incident.“ Uber said it will provide drivers whose licenses were compromised with free credit protection monitoring and identity theft protection.

On This Black Friday, Some Mall Visitors Come Out for More Than Bargains

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Like millions of other Americans, Zahid Khattak headed to the mall early the day after Thanksgiving. But unlike many others, he wasn’t stocking up on holiday presents. That, he said, he would do later, online.

“This is just an event - an excuse to come out,“ he said, as he waited for his 7-year-old daughter to get a purple butterfly painted onto her cheek. “We don’t really need to buy anything.“

So instead, the family waited in a line for face-painting. They queued up for an artist who turned balloons into pink and green swords. They walked to Santa’s workshop. complete with interactive displays. Elsewhere, there were makeovers for moms, and even a selfie stop hosted by a local radio personality in front of the Lord and Taylor.

Managers at Tysons Corner Center in northern Virginia began planning this year’s Black Friday festivities more than a year and half ago as it became clear that more shoppers were choosing to buy online. Their goal: To remind people that going to the mall can be fun, even if there’s no shopping involved

“Long before there was Cyber Monday, there was Black Friday,“ said Bob Mauer, the mall’s marketing manager. “We want to bring back that excitement and show people how wonderful it can be in a physical place.“

The number of Americans who turn up to stores on Black Friday has declined steadily in recent years. This year, 35 percent of consumers who plan to shop during Thanksgiving week say they will do so on Black Friday, down from 51 percent last year and 59 percent the year before, according to professional services giant PWC.

Meanwhile, online shopping is growing rapidly. By 10 a.m. on Black Friday, Americans had already spent $640 million online that day, an 18 percent increase from last year, according to Adobe Analytics. Most of those purchases – 61 percent – were made using smartphones and tablets.

As fewer people venture to stores, retailers are looking for new ways to attract customers, Walmart is hosting a series of “parties” and offering extra discounts for shoppers who pick up items in stores. Nordstrom’s newest Los Angeles store comes stocked with bartenders, manicurists and tailors, but no merchandise. And at Apple, executives say the company’s newest stores – which it calls “town squares” – have outdoor plazas, boardrooms, forums and workshops, all aimed at getting people to linger.

Many mall staples, including Macy’s, Sears and JC Penney have closed hundreds of stores this year, leaving landlords with plenty of room to get creative.

“There are all kinds of interactive displays this year - cosmetics tastings, coffee bars, massages for achy feet,“ said Summer Taylor, a director at the accounting and consulting firm Deloitte & Touche. “Malls are really trying to diversify their offerings. They have to, to bring in more customers.“

The shift comes as retailers – and shoppers – treat the holiday shopping season as more of a weekslong slog than a one-day sprint. Discounts have become more spread out, both in stores and online, as consumers demand lower prices and greater convenience, which means the Black Friday frenzy isn’t nearly as pronounced as it once was. That was certainly the case in the morning at Tysons Corner Center.

“We can’t believe it – we’re shocked by how empty it is,“ said Shadon Petty, 45, who has been coming Black Friday shopping with her sister for at least 20 years. “We walked in and were like, ‘What’s going on? Is something wrong? Did we come to the wrong place?‘ “

They knew this year was different, her sister added, as soon as they pulled into the parking lot. “This is the first year we’ve actually been able to choose where we park because there were so many empty spots,“ Stephanie Graham said, “It’s like nobody cares about Black Friday anymore.“

Although many retailers were promoting sweeping discounts - 50 percent off everything at Hollister and Ann Taylor, $1 books at the American Girl store - customers seemed largely unfazed. The stores with the largest crowds – Apple and beauty company Lush, among them – weren’t offering any Black Friday specials.

Meanwhile, Lacoste (where everything was 40 percent off) and Kay Jewelers (25 percent off) remained largely empty Friday morning. L.L. Bean was offering free paracord-making workshops, but 30 minutes in, nobody had showed up to the company’s booth.

“It feels more like a Saturday than Black Friday,“ said Ruby Scribner, 25, who works at Spencers, the chain that specializes in gag gifts. “I honestly thought it would be different.“

Mae Thamer-Nall of Potomac, Maryland, had thought so too. She had been avoiding going to the mall on Black Friday her entire life, she said, because she had feared large crowds. But Friday was shaping up to be different.

“We can’t believe how few people are at this mall,“ she said. “It’s actually kind of pleasant.“

There is also a growing movement to get Americans to think beyond shopping on Black Friday. REI, the outdoor goods chain, is closing its stores for the third year and encouraging employees and customers to spend the day outside.

But it’s not just retailers that are offering alternatives: State parks in Minnesota are offering free admission. And in Milwaukee, 11 craft breweries are spending the day unveiling their newest beers.

The state of Washington, meanwhile, has filled its lakes with thousands of “large” trout to encourage residents to grab their fishing lines instead of their credit cards the day after Thanksgiving.

“Let’s face it: If you’re going to get up early and wait around, you might as well go fishing,“ said Jason Wettstein, a spokesman for the Washington Department of Fish and Wildlife. “Shopping can wait.“

Amira Tohan, 12, thinks so, too. She had arrived at the Tysons mall early Friday with a friend - but instead of shopping, she was getting her hair blow-dried at a Dysons pop-up.

“We saw the blowouts and were like, why not?,“ she said. “The stores are pretty empty, so we can go shopping later.“

Eventually, she said, she planned to stop by Lululemon, Sephora and Bath & Body Works. She was hoping for discounts but said it would be fine if she went home empty-handed.“

“It’s just fun to be here,“ she said. “Even if you don’t buy anything, the experience of going shopping gets you in the Christmas spirit.“

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