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Is the Secret Ingredient to McDonald’s Recovery Butter?

Is the Secret Ingredient to McDonald’s Recovery Butter?

Sales soar after return of the savory ingredient.

http://juanpollo.com/route-66-attractions/mcdonalds-museum/

As an iconic American industry, we have been following McDonald’s and its struggle to deal with minimum wage requirements and greedy unions.

Now, after a series of bad quarterly reports, the corporate accountants are serving Happy Meals:

The struggling fast food giant announced Thursday that global same-store sales grew 4% in the third quarter of 2015, with the gains driven by growth in several international markets.

The burger chain even ended a seven-quarter losing streak in the U.S., where same-store sales grew 0.9% compared to the same period last year. Overall, McDonald’s profit climbed to $1.3 billion for the quarter, up from $1.07 billion for the same quarter a year earlier.

The Oak Brook, Ill., hamburger chain surpassed analysts’ expectations with earnings of $1.40 per share. Analysts had projected net income of $1.27 per share, according to Thomson Reuters, compared with $1.09 reported a year earlier. McDonald’s reported they spent $3.1 billion on share buybacks and dividends during the last quarter, a move that helped boost earnings per share

“We’re running better restaurants than we were a year ago,” McDonald’s CEO Steve Easterbrook told analysts Thursday.

One reason for the success may be that the firm is relying more on customer satisfaction than progressive food demagoguery in its menu choices.

The return of butter to the Egg McMuffin is an example of an epic free market decision:

If you want to understand McDonald’s MCD 1.55% nascent turnaround, consider a recent change it made to its breakfast classic, the Egg McMuffin.

Earlier this year, the world’s largest restaurant chain replaced margarine and reverted back to its original recipe that used butter. That back-to-basics approached led to an immediate double-digit percentage increase in sales of the Egg McMuffin, executives said on a conference call on Thursday.

That is just one of many examples of the changes McDonald’s has made to its food to end a years-long slide in its U.S. business. And there are promising signs: McDonald’s reported same-store U.S. sales growth of 0.9% in the third quarter, its first quarterly increase in two years, beating analysts’ projection of a 0.2% decline, according to Consensus Metrix. The news sent McDonald’s shares to an all-time high.

Other efforts have included using 100% chicken breast meat and milk when it introduced its butter milk chicken sandwich this summer. And McDonald’s has been toasting its buns for longer, and changing how it sears and grills burger patties.

However, franchises report that its new “all day breakfast” concept is laying an egg.

The new menu is slowing down service, reducing average ticket costs, and causing chaos in the kitchens, franchisees told Nomura analyst Mark Kalinowski in a new survey.

“In small stores, the problems are vast with people falling over each other and equipment jammed in everywhere,” one franchisee wrote in response to the survey.

Another wrote, “All-day breakfast is a non-starter. We are trading customers down from regular menu to lower-priced breakfast items. Not generating new traffic.”

A third called it “erratic, distorted, disorganized direction from McDonald’s,” while nearly a dozen more franchisees complained that it slowed down service and added complexity to the kitchens.

The corporation is still also experimenting with new food items, such as sweet potato fries. Perhaps this is an effort to shift to “healthier” food options?

However, as we have chronicled, the government’s idea of what is “healthy food” has changed significantly . . . and not necessarily based on reality. Based on Egg McMuffin sales, I would argue that the best path for McDondald’s success is to ignore the progressives and return to basics.

[Featured image via McDonald’s Museum]

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Comments

“…I would argue that the best path for McDondald’s success is to ignore the progressives and return to basics.”

Yep. Serve your consumers fries cooked in beef fat! Remember those? YUM!

Skeeeeeerew the “health nazis”. Let ’em open their own places and compete, but don’t let them brow-beat you.

Dance with them as brought you (success). Sure, test market new things, but remember the foundation.

    Estragon in reply to Ragspierre. | October 25, 2015 at 4:22 pm

    Was it health nazis or Hindu protests about the fries that led to getting rid of the tallow-fried version that made the chain famous? Never got that, why worry about vegetarian business when you are a burger joint? Even in California, there should be limits, places people can go where Vegans are not allowed to mess with the menus.

      Ragspierre in reply to Estragon. | October 25, 2015 at 5:39 pm

      It’s nothing to do with vegetarian consumers. It was trans-fat cultists and food nazis with fax machines and a big press following.

      Just like movie popcorn and coconut butter…which foodies now thing is the food of the gods. You’ll see it everywhere.

      Milhouse in reply to Estragon. | October 25, 2015 at 7:41 pm

      It was health nazis, not vegetarians or Hindus, because they didn’t turn it vegetarian. They switched from beef tallow to vegetable oil and a beef extract for flavor. They never pretended in their official advertising the fries were now suitable for vegetarians, but some individual people misunderstood and did write some things that could give such an impression, so when a Hindu sued them for fraud they settled, and made sure everyone at the company was on the same page. It uses heart-healthy vegetable oil, but it’s not vegetarian.

      NC Mountain Girl in reply to Estragon. | October 25, 2015 at 10:52 pm

      Fine dining chefs envied the taste an uniform texture of those fries, properly salted whem fresh from the fryer.

    JerryB in reply to Ragspierre. | October 25, 2015 at 7:21 pm

    I remember those crispy, delicious fries. Now that we’re past the fat-cholesterol nazis, let’s get back to good food.

    http://www.westonaprice.org/health-topics/the-oiling-of-america/

Henry Hawkins | October 25, 2015 at 3:33 pm

Marketing. Announce you’re seeing a boost in sales because of using better ingredients in hopes people will stop at McDonalds and check it out.

I’d love to see a blind taste test to see if people can reliably tell the difference between a butter/non-butter McMuffin.

    Anonamom in reply to Henry Hawkins. | October 25, 2015 at 6:02 pm

    Spot on. My mom finally escaped the fast food business after 30+ years-an industry which is in serious decline. I expect all this rejoicing is news to all the franchisees who are barely hanging on. (And how much does McD corp really care about sales? They make their money on the property side of the equation.)

    Are you kidding me? If you cannot tell the difference between real butter and margarine, you either smoke too much or are a shill for the oil industry (IYKWIMAITYD)

I eat several McMuffins per week and didn’t notice the change from margarine to butter. I think the sales increase is simply due to the price. Where I live McMuffins are two for three bucks.

Butter, like bacon, makes everything taste better 🙂

Bacon flavored butter would be overkill though I think.

The “reality” is that the government’s nutrition guidelines have been misinforming, and harming, our health for decades now.

If McDonald’s really wants to serve healthier food, and bring back customers, it should cut the sugar, margarine, and processed flour from its menu, and serve more protein and full fats.

Is it the butter, or the fact it’s now available all day that caused the sales to skyrocket? Merits a look before making decisions based on one data point.

The big complaint about all-day breakfast from franchisees is that it hasn’t increased the number of customers per day, just lowered the average check, which is not good.

Here’s the better quality competition, near the Chicago area corporate headquarters of McDonalds:

https://en.wikipedia.org/wiki/Smashburger

http://www.shakeshack.com/

I eat at the Shake Shack located at the Chicago Athletic Assoc. once a week and never at McDonalds.

DINORightMarie | October 25, 2015 at 4:48 pm

Yeah, and start salting the fries again. And frying them with sugar in the mix of fat (oil or suet).

And make the burgers from angus beef, or another great flavored beef! Work on more local distributors of meats and supplies to encourage people that they’re eating great food again!

And ADVERTISE that you’re going back to the future by giving them great food again and not caving to the federal leviathan’s endless regulations!!

Well, I can dream………………

Henry Hawkins | October 25, 2015 at 5:25 pm

RE: “However, franchises report that its new “all day breakfast” concept is laying an egg.”

From 1999-2001, I owned a Roly Poly Rolled Sandwich franchise in Raleigh NC. It is corporate owned, meaning you kick up $$$ to corporate and corporate kicks down mandates on how they want things done. They were not interested in the fact that customers in, say, San Francisco are different than customers in Raleigh NC, that mandates on how and what to serve help some franchises and hurt others. It got so bad I sold off within two years. Damn shame, too, because the suburbanites, Yuppies, and college students (NC State, Shaw U, Peace College, all in Raleigh) absolutely loved wrap sandwiches, especially since we offered over 60 varieties and delivered for free.

Corporate oversight can be every bit as defeating as government oversight, despite the best of intentions.

    Ragspierre in reply to Henry Hawkins. | October 25, 2015 at 8:17 pm

    I never would have pegged you as a Roly Poly Man.

    Wasn’t there a Donovan song about that…???

      Lord Whorfin in reply to Ragspierre. | October 26, 2015 at 9:01 am

      Are you thinking of the Hurdy Gurdy Man?

      Henry Hawkins in reply to Ragspierre. | October 26, 2015 at 12:39 pm

      I am a small-time venture capitalist and base my decisions on the bottom line, of course. I’ve also owned or controlled a sign company, several DWI schools, and a bar. The real money is in drugs, but there’s a risk factor there I could not abide. Broke even on one deal (well, I might have lost $5), but did well on everything else. I was stealing other people’s wealth left and right and keeping it for my damn self, all while maintaining one boot on the neck of minorities, women, and liberals. It was easy. Being white, it was all just handed to me.

As someone who spent 34 years in restaurants ,I was a little leary of the breakfast all day. Your money on breakfast is the lower cost of the items and the speed of turnover. Their restaurants do not have the space requirements or the grill requirements to not affect service speeds on lunch and dinner . You also encounter the downsale effect t
,not new traffic just trading down lowering check average . They need to concentrate on what they do best at least for present unit configurations. This has got to be a management service nightmare.

I rarely visit McDonald’s, but I have had the bacon, egg and cheese biscuit for lunch twice in the last week. I’m new traffic.

I’m not a burger fan.

    Their burgers are OK but the breakfast sandwiches are the best. This past Saturday they were OUT of biscuits at 10:30 a.m., and considering they serve breakie all day now, that’s bad. The same thing on a muffin was fine, though. Their coffee is better than mine and mine is gourmet. All in all, I’ll go for breakie there way more often than anything else, especially since their fries are inedible unless and until they go back to the beef fat frying.

    I usually don’t get out until after 11 a.m. so the all-day thing is fine with me, but I certainly understand the nightmares it’s causing some franchisees. I’m also only an occasional fast food eater (once a month or so). The all-day thing can definitely get me out more often.

It’s understandable that the all day breakfast menu would throw a wrench in the works. Breakfast service is not fun. To run it all day, in addition to lunch and dinner, will slow things down and cause confusion. Maybe once they get everything worked out, everyone being on the same page, and it will take time, it will get better.

Changes in the ingredients, I chalk up to the food nazis. Vegetarians won’t eat the egg McMuffin anyway, so changing butter to margarine goes to the food nazis or it may be due to cost.

One of the changes being the use of salt. Hamburgers, for example, not being seasoned during the cooking prpcess makes a huge difference. If food isn’t seasoned during the cooking process, no matter how much a person seasons it afterwards, it won’t help much. Many times, a person will use more salt to try and make up for for it and use more than what would have been used during cooking. An example being pasta. If you don’t salt the water, the pasta tastes like nothing. The other day, I purchased a burger from Wendy’s and it actually tasted like something. Not sure what they did but I would swear they salted and peppered it during the cooking process. It was the best burger, from a fast food restaurant, that I had in years. If I am in a hurry, I don’t time to sit and season my food. You should only have to season food if necessary as opposed to making it palatable.

Same with fries. Who wants to eat fries with little salt or have to ask for salt which does+’t taste the same as salting them when they come out of the fryer. If they have sat, the salt rolls off anyway.

If it ain’t broke, don’t fix it. Keep it simple.

NC Mountain Girl | October 25, 2015 at 10:56 pm

Astronomical beef prices have not helped any burger chain. Beef has become a luxury item for many and most chains produce a consistent but mediocre burger. Price increases for such products have probably seen some people leaving for chicken and pork based alternatives.

The many websites of McDonald’s list the following ingredients in Egg McMuffin:

PASTEURIZED PROCESS AMERICAN CHEESE, CANADIAN STYLE BACON, EGG, SALTED BUTTER, CLASSIC ENGLISH MUFFIN

If fake butter is in use, they sure are not telling anybody. Once upon a time, maybe 30 years ago, the Egg McMuffin was very tasty with a thick piece of real canadian bacon, but the stuff they serve today tastes more like regular ham overcome by far too much cheese in order to mask the difference.

Freshly prepared would go a long way toward making the egg sandwich taste better.

I don’t go to drive-throughs much, but I highly recommend Hardees Breakfast Combo: Scrambled eggs, choice of bacon or ham, biscuit with a little tub of sausage gravy. Hoo-boy, yeah baby. Hardees makes pretty good biscuits. Tell ’em Henry sent you for a free straw with your drink.

I haven’t been to McDonalds for tears. Their burgers are tasteless. Their fries use to be good. Their fish sandwich was dry. Their egg Mc Muffins were decent. I prefer Steak & Shake for good taste. Their fries are great.

[…] Giving the people what they want. It’s such a simple concept. […]

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