McDonald's is constantly under the microscope, and rightfully so: as one of the largest fast-food chains in the U.S. (not to mention across the globe), the choices it makes can have reverberating consequences for competitors, customers and even the supply chain. Since March 1, 2015, when current CEO Steve Easterbrook took control of the company, many have praised McDonald's, but some shareholders seem to be expecting more from the company.
One of Easterbrook's main objectives was to simplify the company's menu, and it was largely successful. However, consumers want options, and it appears the company is looking for new ways to entice its customers. The company is currently testing two new versions of the company's classic Big Mac in the Central Ohio and the Dallas area markets. The Grand Mac is a hamburger made with two beef patties totaling a third of a pound that will sell for $4.89. McDonald's is also testing a Mac Jr. which can be described as a single-layer Big Mac priced between $2.39 and $2.59.
It's still fairly early, but the response so far on social media seems to be positive. The move will allow customers a bit more variety in their choices without placing undue strain on kitchen staffs. However, previous "successful" launches by the company have been somewhat negated by franchisee responses. The company's launch of All Day Breakfast definitely won the company some points with consumers on social media, but franchisees quickly complained about the breakfast offerings cannabalizing sales opportunities for items typically reserved for later in the day. The company also won customers over with the McPick 2 plans, but franchisees found that the $2 and $5 meals weren't adding up to larger checks. How these products fare in the long term remains to be seen.
The company isn't just testing new burgers, either. After the internet was set alight with news of Chipotle's potential entry into the burger space, it appears McDonald's will try it's hand at fast-casual. Franchisee Chris Habiger will open a new, 6,500-square-foot McDonald’s in St. Joseph, MO, this summer, and by most accounts, it will be unlike any other in the country. Most headlines focused on the "all-you-can-eat fries" aspect of the story, which in and of itself raises the location above its peers, but the rest of the details make the restaurant seem more like a fast-casual locale:
Clearly, the fast-casual concept and the Big Mac variations are just two possible ideas for the chain to adopt as a whole. It's not clear whether the ideas will take off, but the company continues to search for innovative ideas to keep the brand alive. What do you think McDonald's will latch on to while it searches for a way to ensure future growth?
Several food companies reported earnings over the last week. While manufacturing and retail are thriving with increased sales during the pandemic, portions of the foodservice segment continues to struggle.read more
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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