McDonald's - GOING PREMIUM

If MCD goes after the premium segment in August, it will not be good for CKR


According to the Chicago Tribune (they always seem to get internal company documents), the premium Angus burger will be rolled out in August. The document refers to a national launch for the one-third-pound Angus burger between Aug. 3 and Aug. 30.


McDonald's began testing the burger in Southern California in March 2007. It is made from made from a higher grade of beef than other McDonald's burgers and it will become the most expensive U.S. sandwich on the menu, priced at about $4.


Last fall management said they wouldn't roll out the Angus nationally in a weak economy. Lower beef prices are likely the reason for the launch. Don Thompson told the franchise community that the Angus is a "Big Opportunity" because beef costs are down. This could also mean that McDonald's can introduce the product with lots of coupons to stimulate trial. You can see it now, a coupon for a free latte with the purchase of an Angus to boost McCafe sales or vice versa!


I see this as being a big negative for CKE Restaurants (CKR). While the Angus burger has been in Southern California since 2007, a more aggressive approach to the pricing of MCD's premium product will hurt Carl's Jr. As it is, Carl's Jr. is already struggling with its premium pricing strategy and MCD is not going to make it any easier.


Lastly, I have not seen a QSR chain generate incremental traffic by introducing premium products.


As an aside, I'm starting to see a lot of ads for the MAC snack wrap....... Now this looks good to me!

McDonald's - GOING PREMIUM - macsnack


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