McDonald's hopes fresh beef can change its image

The burger giant is introducing the upgrade in waves this spring, with plans for more menu changes soon.

McDonald’s is serving fresh beef quarter-pound burgers made to order in about 3,500 restaurants, with plans to add them to nearly all of its 14,000 U.S. locations in the coming weeks before a planned national ad campaign this May.

And that won’t be the last of it. Made-to-order burgers are part of a broad overhaul of the company’s menu that is aimed at transforming the way consumers view the fast-food burger giant.

For instance, company executives at a press event in Chicago on Monday said it’s “possible” that fresh beef could in time be expanded to include smaller burgers used in the chain’s hamburgers, cheeseburgers and regular-sized Big Macs.

“It’s certainly possible,” McDonald’s USA President Chris Kempczinski said in an interview, noting that the chain started its All-Day Breakfast with a few items at first before expanding to other items a year later. For now, the company is focused on beef used in the chain’s Quarter Pounder burgers and its Signature Crafted burgers.

Fresh beef is being served in a number of markets, including Atlanta; Miami; Raleigh, N.C.; Charlotte; Nashville; Salt Lake City; Memphis, Tenn.; and Orlando, Fla. Additional markets, including Denver, Houston, Los Angeles, San Francisco, Seattle and others, will transition over the next month, with the rest by early May.

For McDonald’s, moving to higher-quality items is a risk. The chain has been an incredible success because of its speed, affordability and convenience. The quality risks reducing speed, which is an important element inside the drive-thru, where the chain gets about 70% of its business.

Made-to-order burgers could slow that down, which some worry could ultimately hurt sales by turning away convenience-focused customers.

But the fresh beef cooks faster on the chain’s clamshell, flat-top grills than frozen beef—it takes 65-70 seconds to cook a fresh, quarter-pound beef patty.

And the chain thus far has plenty of evidence to suggest that improving the quality of its food lures more customers. The chain’s higher-quality, Buttermilk Crispy Chicken Tenders were a success beyond anything the company expected late last year. Sales of Chicken McNuggets improved after the company removed artificial preservatives from them, and so did sales of Egg McMuffins after the company started using real butter.

Early tests of fresh beef, meanwhile, have yielded positive results in surveys of customers—90% of whom say they are satisfied with the fresh beef burgers and intend to purchase them again.

“We are a classic burger destination,” said Linda VanGosen, vice president, menu innovation, with McDonald’s. “We needed to deliver a better burger experience to them.”

Executives said that the customers’ overall perception of the brand improved, too, another key element for a chain that routinely finishes low on customer survey scores despite its prevalence and strong sales.

“We know we have something that is having a tremendous impact on the customer experience and the business,” VanGosen said.

Still, the company was cautious entering the fresh beef test, given the concerns about speed and the drive-thru, as well as safety.

Joe Jasper, a 20-unit operator out of Fort Worth, Texas, is a member of McDonald’s menu innovations team, and put his staff to work to try to find a way to make made-to-order burgers work in the drive-thru.

They tested different grills and other equipment in a bid to determine the process. “We didn’t leave anything to chance,” he said. But they quickly realized that fresh beef was the key ingredient because it cooks faster. A manager figured out a process that worked in February 2015 and sent Jasper a video while he was meeting with corporate executives.

The process was perfected, and the test was gradually expanded over the years, ultimately hitting markets in Tulsa, Okla., and Dallas.

“This is such a sea change for our system,” Jasper said. “It’s one of the best innovations we’ve done on large sandwiches in a long time.”

But executives say that it’s simpler than it appears, and simpler than the chain’s shift to All-Day Breakfast because it’s only one product, and one new refrigerator that is next to the grill, where the fresh beef patties are held in plastic inside of blue boxes.

It was a major change for the chain’s suppliers, which invested $60 million to shift from supplying frozen beef to fresh beef patties, Kempczinski said. “It’s a significant change for our suppliers,” he said. “That’s why it takes time. It has to get it right.”

And McDonald’s is taking careful steps to ensure the safety of its food. Workers are only to handle the fresh beef wearing gloves, for instance, as to not potentially contaminate other food products. The company is also using unannounced, third-party visits to inspect restaurants for food safety issues.

The safety was a vital concern for a chain that watched its one-time protege, Chipotle, get its sales devastated with a series of incidents in 2015.

“Food safety is the highest priority for us,” VanGosen said. “We have checks and balances along the way.”

But improving quality is viewed as worth the risk for the chain, which last year recorded an increase in U.S. traffic for the first time since 2012.

“There’s no more important place for us to focus on improving the food than on the quality of the burger,” Kempczinski said.

The company may also look at chicken. Kempczinski and VanGosen said in an interview they would look at ways to expand the company’s chicken offerings following the successful chicken tenders product last year.

VanGosen said the chain will keep looking to “drive more interest in the category for a while” and “brighten” the chain’s chicken offerings.

But there are other possibilities. Jasper hinted that, by making burgers to order, McDonald’s could more easily make other innovations while keeping its speed.

“I’ve seen what’s coming,” Jasper said. “The smile on my face is not an accident.”

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