The Big Mac, wrote a top McDonald’s franchisee in a memo to fellow operators in July, “has gotten less relevant.” This is the problem facing the world’s largest hamburger maker—its burgers aren’t good enough.
Just one in five millennials, the fast-food industry’s core customer, has tried the flagship product, the memo said. The number of hamburgers sold at McDonald’s U.S. restaurants has been flat for the past few years, and was growing only at a 1% to 2% annual rate before that, according to former high-ranking McDonald’s executives.
New, “better burger” chains are pulling in customers with gourmet, made-to-order burgers and quick, casual service. Serving that kind of product is at odds with McDonald’s strategy of six decades, in which speed and low cost are pillars of sales.
“We have to nail it,” McDonald’s USA President Mike Andres said in a recent interview. “How do we deliver the best burger at the speed of McDonald’s and, ultimately, at the value you’d expect from McDonald’s? That’s what we’re working towards.”
A “sensory” panel is helping McDonald’s refocus on flavor, and the company is testing using fresh instead of frozen beef, different cooking techniques and an ordering system for made-to-order, customized burgers. Steve Easterbrook, who became chief executive last year, said the company is trying new things and rethinking “legacy beliefs.”
The challenges are clear. McDonald’s, the quintessential fast-food chain, gets nearly 70% of its U.S. business through the drive-through. Burgers are usually made in advance and held in warming cabinets so they are ready when customers pull up. McDonald’s said its goal for delivery time, from when the order is placed to when it is delivered to the customer, is a mere 90 seconds.
Even though McDonald’s has broadened its menu, burgers still account for roughly 20% of the chain’s total sales of $8.6 billion in the U.S. last year, the former executives said.
Attempts in recent years to sell burgers with higher-quality ingredients—which result in higher prices—haven’t been successful.
The mid-1990s Arch Deluxe, with a potato-flour bun and mayonnaise-mustard sauce, didn’t fly with a $2.49 price tag, then 32 cents more than a Big Mac, and was phased out in 1998. In 2009, customers found $4 to $5 for a line of Angus beef burgers too expensive. Last year, McDonald’s tried again to introduce a more-premium burger made from sirloin, a choicer cut of beef, but customers weren’t willing to pay $5 for that, either.
Executives and consumers felt burger quality had slipped. McDonald’s burgers came in last in a Consumer Reports taste survey of 21 hamburger chains in 2014. “The world isn’t waiting for another burger from McDonald’s,” a former senior McDonald’s executive said. “It’s waiting for a better burger from McDonald’s.”