There were a few reasons McDonald’s decided to slice its Signature Crafted Line. Firstly, the brand has been on a yearlong journey to simplify operations and return to “running better restaurants,” as CFO Kevin Ozan noted earlier in the year. McDonald’s has since cut back its overnight menu, offered operators All-Day Breakfast flexibility, and continued to work on speeding up its drive thru.
The company even said last week it was testing kitchen innovations so crewmembers could focus on customer experience and develop soft skills, such as teamwork and responsibility. This includes voice-activated order taking, automatic beverage equipment, and advanced kitchen equipment piloted at “a handful of restaurants.” McDonald’s added that it’s introducing new job positions and trainings to provide employees with lasting skills beyond day-to-day tasks.
Everything considered, though, McDonald’s likely wouldn’t have cut its Crafted, higher-ticket items in favor of convenience if there wasn’t something else driving transactions to the high end of its menu. All-Day Breakfast and premium items have been two of the biggest complexity adds in recent memory for McDonald’s. But so was fresh beef Quarter Pounders. When McDonald’s announced it was removing Signature Crafted items, it also announced it was releasing a fresh beef Quarter Pounder lineup, including a Deluxe that features lettuce and tomato, and a Quarter Pounder Bacon.
The rollout of fresh beef Quarter Pounders, cooked to order, began in March 2018. To that point, it was available in about 3,500 units and called “the most significant change to our system and restaurant operations since All Day Breakfast,” by USA president Chris Kempczinski. This required training 3,000 or so independent operators to prepare the product, as well as work with new equipment. It included specially designed packaging, refrigerators to maintain proper temperatures, dedicated kitchen utensils, and food-safety updates.
However, fresh beef was an important step to compete with other chains in the space, like Wendy's, as well as upstart better-burger fast casuals, and came from two years of listening to customers and “evolving our business to build a better McDonald’s,” Kempczinski said.
McDonald’s said Monday that the launch of fresh beef quarter-pound burgers and the promotions that followed resulted in the U.S. system selling 40 million more burgers in Q1 2019 compared to the prior-year period.
Marion Gross, SVP of supply chain management, told USA Today sales of the burger are up 30 percent on average since the frozen-for-fresh swap. McDonald’s quarter-pounder sales increased by more than 50 percent during the first month of the national rollout.
"Our numbers speak for themselves, with the introduction of fresh beef and the promotions including fresh beef quarter-pound burgers helping result in a sustained quarter-pound burger sales increase of 30 percent on average throughout the entire first year," Kempczinski said in a statement to Business Insider.
“The introduction of fresh beef is just one step in McDonald’s USA’s continuous journey to implement meaningful changes across our menu—changes that we know are important to our customers, our franchisees, our people and our planet—including our commitments to coffee sustainability, cage-free eggs and evolving our iconic Happy Meal,” the chain added in a release.
McDonald’s has also removed artificial preservatives from its American cheese, Big Mac Special Sauce, regular bun, Quarter Pounder Bun, and Big Mac Bun in seven classic burgers. “It’s all about building a better McDonald’s and how we’re showing you what we’re made of,” the company said.
Of course, even with a push toward simplification, McDonald’s was never going to back pedal on its fresh-beef initiative. Yet all of these recent changes suggest it’s a platform worth further investment. McDonald’s can supplement its menu with core products, updated, instead of trying to anchor the higher end of its offerings with new lineups.
McDonald’s menu strategy is quickly evolving to follow that blueprint. The chain appears set on national framework deals, like the 2 for $5, balanced by local flexibility in regards to price and promotions. And it’s pushing core items over premium ones, both in preparation and marketing. It’s electing instead to move ahead with LTOs over new, hard-to-make offerings, like the Signature Crafted. McDonald’s recently brought global favorites to stores, for example. This works from a labor perspective as well as a consumer preference one, as the Quarter Pounder sales prove.
Customization is also losing steam in favor of convenience. McDonald’s introduced the Signature Crafted Recipes line, which included Pico Guacamole, Sweet BBQ Bacon, and Maple Bacon Dijon sandwiches, available with either beef or grilled or crispy chicken, in early 2017. And the previous November, McDonald’s discontinued its “Create Your Taste” customizable burger platform, which allowed guests in select cities to build their own burgers on touch-screen kiosks. The kiosks, as the Experience of the Future design shows, proved a feature worth investing serious capital in (4,500 locations at a cost of nearly $1.5 billion last year alone). But having kitchens take on burgers that weren’t predesigned, to some degree at least, did not.
McDonald’s sales have been steady in recent quarters, although they’ve been driven by check, not traffic. The company reported first-quarter global comparable same-store sales of 5.4 percent, including a 4.5 percent increase in the U.S. The stateside comps reflected successful promotions, McDonald’s said, including the Bacon Event, its $5 Mix and Match deal, and Donut Sticks, as well as a net positive impact from the EOTF designs.
Apparently it also included a whole bunch of Quarter Pounders being sold.
McDonald’s didn’t break out its traffic figures, only to say it was similar to recent declines (guest counts fell 2.2 percent last year).
The equipment changes mentioned before could speed up operations and lead to more transactions, McDonald’s stressed previously. This is true of the drive thru as well, which clocked the slowest time in this past year’s QSR Drive-Thru Study at 273.29 seconds. Times have increased, year-on-year, for five straight. McDonald’s, led by CEO Steve Easterbrook himself, is focusing on a bevy of changes, including acquiring decision-logic company Dynamic Yield for $300 million, and hosting competitions to encourage best practices.