Friday, 18 August, 2017

Something completely different at McDonald's: Fresh beef

Javier Burns | 01 April, 2017, 01:53

The fast-food giant announced Thursday that, by the middle of next year, all of its quarter pounders will be served with fresh, not frozen beef, and cooked fresh-to-order. Under Easterbrook's leadership, McDonald's has also promised to use only cage-free eggs by 2025 and plans to quit using artificial preservatives in Chicken McNuggets.

McDonald's recently said it would try to retain its core customers by improving the quality and affordability of its food.

"Both are quantum leaps in terms of retooling our processes", Jasper said of all-day breakfast and the fresh beef move.

"They're trying to get people to give them another shot", said Trip Miller, managing partner at Gullane Capital Partners, which holds 20,000 McDonald's shares.

McDonald's has long taken heat from customers over its ingredients, and overall trends toward more healthful eating have impacted consumer perception of the restaurant chain. Even though fresh beef will make its burgers more premium, McDonald's vows to hold the line on price. That's what we're working towards'. "As in most cases, our size and scale are a benefit".

Two key drivers of McDonald's valuation are the number of customers served by its restaurants per year, and the average spend per customer at McDonald's restaurants.

Thus far, Burger King has stayed out of the fire and has not yet offered its thoughts on the latest McDonald's move - possibly because it's busy promoting its Whopper toothpaste.

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Preparing fresh beef burgers on order is likely to take longer than heating frozen patties, which are now used in most of the company's burgers.

In 2015, the company announced a number of changes to how it serves and sources food by offering All-Day Breakfast, committing to sourcing only cage-free eggs by 2025 and serving only chicken from animals that were not treated with antibiotics important to human medicine - a move that was completed almost a year ahead of schedule in 2016. Rather, it says it is driven by customer demand and could come to encompass other sandwiches as well.

Meanwhile, at a time when the US restaurant industry is facing a slowdown, food companies are adapting to changing consumer preference, bringing more transparency in their operations and trying to appeal to more health-conscious eaters by altering their practices and food lineup. Same-stores sales were down 2.9 percent in the fourth quarter.

Burger King, which is part of Restaurant Brands (QSR), and Wendy's both reported gains in comparable sales during that same time.

Indeed, "beef patties for the company's signature Big Macs and other cheeseburgers would continue to be frozen, prepared ahead of time and kept warm", reports Daniel Victor in the New York Times.

A sign is posted in front of a McDonald's restaurant on March 12, 2013 in Mill Valley, California.

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