McDonald’s Corp. confirmed Thursday that it is removing its premium Angus Third Pounder burger from U.S. menus.
“McDonald’s will be removing the Angus Third Pounder burgers from our national U.S. menu to make room for new and exciting choices for our customers. While these burgers will no longer be available in our restaurants, they may still play a future role on our menu,” McDonald’s USA spokesperson Danya Proud said in a statement.
“As always, we are constantly evolving our menu and listening to our customers to meet their changing needs and make decisions about what to add and what to remove from our menu on a case-by-case basis,” Proud said.
McDonald’s foreshadowed the Angus move earlier this year, when it cut Chicken Selects and Fruit & Walnut Salad from its U.S. menus.
The burger was introduced in 2009. The removal of the higher-priced item — available in Deluxe, Bacon and Cheese, and Mushroom and Swiss versions for $4.39 to $4.49 — came after McDonald’s Corp. reported domestic same-store April sales rose only 0.7 percent.
Some McDonald’s units have already removed the Angus Third Pounder from their menus. However, a manager at a Dallas location, where the Angus burgers were priced at $4.39, said, “We have it for now.”
Analyst Howard Penney, managing director of Hedgeye Risk Management, told Nation’s Restaurant News that the Angus line “never resonated with consumers.” He added that it was an expensive product with lower margins than Quarter Pounders and other McDonald’s items.
“It’s a difficult product to execute,” Penney said, “and it’s expensive. And it got more expensive as beef prices went up.”
McDonald’s was also squeezed by post-recession, cash-strapped consumers.
“They can’t raise prices at the high end,” Penney said. “They don’t have that pricing flexibility. I imagine the margins compressed to the point where they just had to get rid of it.”
In January, Penney reported that McDonald’s units, with promotions, tended to sell roughly 70 Angus Third Pounders per day in U.S. markets. Without promotions, that number fell to less than 40.
The challenge for McDonald’s, Penney added, is replacing the Angus with a higher-end burger that comes with more pricing flexibility. “They need that flexibility and to bring the cost down,” Penney said. “It’s all about menu-engineering the higher margins.”
The removal of the Angus Third Pounder does leave a hole for the company, he said. “There’s a dislocation in the short run from a sales perspective,” Penney said.
McDonald’s is testing three burgers in the West Coast California market that use the in-house quarter-pound patty with three different sauces. “They are basically dressing up the quarter pounder burger patty that they already have in the store,” Penney said. “They can basically make it a little bit fancier.”
That customization appeals to Millennial customers. “McDonald’s wants to offer variety as well,” Penney said. “That’s what Millennials want.”