Is McDonald’s in crisis mode? That’s probably a bit of embellishment, but a rare sales decline certainly merits plenty of headlines nonetheless. During Monday morning’s earnings call, executives reiterated several times that its $5 Meal Deal is doing what it was intended to do (drive traffic, lift value perception) to turn things around. Further, the company is working in earnest with franchisees to come up with a sustainable solution centered on even more value. Indeed, much of the call was focused on that value equation.
But there are several additional levers besides value that the company plans to pull to get sales and traffic back into the black. One of those levers is a sharpened focus on its core menu. We know McDonald’s has massive global equities – 17 of them are $1 billion brands, like the Big Mac, the McFlurry, and McNuggets. We know the chain is homing in on those equities to help simplify operations and, ideally, boost customer satisfaction. We know the company continues to roll out its “best burger” globally, an effort months in the making and featuring softer buns, more sauce, and tweaks to the cooking process.
And we know it is also working on a bigger, “more satiating” burger to further its leadership position in the category. This isn’t necessarily breaking news; during the company’s investor day event in December 2023, Jo Sempels, president of McDonald’s international developmental licensed markets, said the company identified an “unmet customer need and significant opportunity to drive future growth in beef” with a bigger burger.
“There is a desire for larger, high-quality burgers that fill you up and are delivered in a convenient and affordable way,” he said.
Now, however, we have a better idea of just what those “larger, high-quality burgers” will look like. During Monday’s earnings call, CEO Chris Kempczinski said the new burger is currently in pilot across three international markets – including Canada and Portugal – and includes two beef patties “perfectly layered with melting cheese, crispy toppings (onions, pickles, lettuce), and a tangy McDonald’s sauce.”
“It’s a quintessential McDonald’s burger with a twist on our iconic familiar flavors, named the ‘Big Arch,’” he said. “We plan to test and learn through the end of the year to gather learnings before scaling more broadly internationally.”
To get an idea of the magnitude of the Big Arch, the offering is reportedly a 14-ounce burger with 1,065 calories. For comparison, the Big Mac is about 7.6 ounces with 590 calories. Should this test prove successful, the burger will be the chain’s first new permanent, global product launch since the Chicken McNuggets in 1983.
Meanwhile, McDonald’s is also leaning more into chicken to win over, or win back, consumers. The company has spent the past several years expanding its chicken platform to meet growing consumer demands and executives have shared that the category is now on par with its beef sales, growing more than 10% annually since 2019.
“We continue to have a significant opportunity for growth in chicken, a category that’s twice the size of beef globally and growing at a faster rate,” Kempczinski said.
To support that opportunity, McDonald’s plans to further expand its McCrispy platform, which is currently offered in more than 55 of the company’s 100-plus markets. In December, executives said the potential exists to add another point of chicken share by 2026.
Notably, coffee was also presented as a major opportunity in December and that has been supported in part by the launch of CosMc’s last year. The specialty beverage concept has a tiny footprint – with just 10 locations planned for now – but it is positioned to provide plenty of product and operational learnings for a consumer set that has clearly proven to have a strong affinity for such products. McDonald’s has provided updates about the buzzy concept on every earnings call since July 2023. This week, however, there was nary a peep about CosMc’s, illustrating perhaps that now – amid an unusual sales decline – is not the time or place for “buzzy.”
Contact Alicia Kelso at [email protected]
