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McDonald’s has spent years trying to perfect a line of premium burgers otherwise known as the Signature Crafted Burger, but now the chain is backtracking on the idea…making the shift to bigger burgers in light of inflation while also testing value meal deals for their cost-conscious customers.
Update 5/7/2024
At a recent conference, McDonald’s discussed the intentional shift away from “luxury” burgers and into new territory, testing a pilot program of “larger burgers” in a limited market before considering a launch global.
It was not specifically outlined on what a bigger burger would look like, or what would constitute it as such but only that it would launch “later this year”.
CFO Ian Borden talked about the shift: “We thought the opportunity was about premium burger which was wrong. “We weren’t successful. (The consumer wants) a large, more satiating-type burger. If those products work, we’re then going to scale one solution to that opportunity globally.”
As more customers are forced to stay home, and make their own meals (and burgers) due to rising prices at fast food chains and restaurants, McDonald’s already seeing the effects from lower sales of the lower income market, has decided a new move is in order. Borden also suggests that this comes as lower-income consumers burned through their pandemic savings.
The CEO admitted that what McDonald’s needs is a “nationwide value” message. What that will look like…he briefly touched on, noting a select location testing period of value meals and the “larger, satiating burger”.
The chain will be testing meal bundle deals across the US and internationally for the time being. In Germany, they have the McSmart; two burgers, fries, and a drink for 5.99 euros ($6.55). They aim to test $4 meals in the US to gauge interest and to make sure there is universal appeal before scaling” it nationwide.
Borden disclosed the writing on the wall, alluding to already feeling a negative impact on the brand: “If you think of the informal eating-out sector, it’s certainly likely this year that we’re going to see negative traffic from a broad standpoint, from an industry standpoint.”
With inflation still in effect, consumers are cutting costs, and cutting down on eating out. Groceries have risen 1% while fast food went up 5.2% this year, leading to a shift in routine among McDonald’s customers.
Borden confirmed this on the conference call saying: “Some of those consumers are just choosing to eat at home more often. I think consumers in 2024 are going to be much more focused on affordability. And that’s certainly what we’re going to focus on and emphasize.”
