Fresh back from a trip up the coast to Oregon where we drove in our car down the Avenue of the Giants, home of some of the world's largest trees; rode in a dune buggy up and down the Oregon Dunes, the largest expanse of coastal sand dunes in North America and, in another size-related moment, sampled the now nationally released Angus Third Pounder at a conveniently-placed McDonalds.
So my thoughts on this burger, the first McD's has launched in 8 years? A hit? Or another Arch Deluxe?
1) Taste: Thumbs up from me on taste and, based on a quick search of other reviews (1, 2), that's the consensus. But the Arch Deluxe burgers also tasted pretty good (apparently) and that wasn't enough to save them.
2) Positioning: The Arch Deluxe was positioned as a sophisticated burger for the adult palate, sold on taste. In its first set of ads, McD's illustrated this positioning, perhaps unwisely, by having kids say how yucky they were. Well, that didn't work. This time around, the Angus Third Pounder is positioned primarily on the basis of its 1/3lb size with its premium quality given an Angus seal of approval. That seems a much better place for McD's to be and one that separates the Angus burger from the rest of McD's hamburgers without implicitly disparaging them.
3) Competition: McD's is late to the larger-size burger market. Carl's Jr. has its Six Dollar Burger, Burger King has its Steakhouse Burger (and, before that, its own Angus Burger) and, of course, other slightly-less-fast food restaurants all have their own versions. Now that McD's is diving in as well, a real battle is shaping up. The most likely result of this battle is that this market segment will grow (like the consumers). From McD's perspective, the earlier presence of others with even bigger, pricier items provides it some cover against Fast-Food-Nation-like criticism for the calory inflation of these products and their premium price point.
4) Timing: How about the timing of this national launch coming as it does on the heels of the McCafe launch and in the middle of a recession? Overall positive, I think. Even though these burgers are more expensive than its other burgers, they are competitively priced against equivalent sized burgers at other restaurants and McD's is still a cheaper meal out than almost anywhere else. As far coming soon after the big investment in McCafe, I think that the Angus launch is actually an important and complementary investment. As Denise Lee Yohn pointed out in a recent article in QSR, McD's focus on coffee had presented an opportunity for its traditional competitors to try and gain ground on the food front. Launching the Angus burger now helps rebalance McD's efforts and block competitive inroads.
5) Operations: One of the biggest advantages of the Angus vs. the Arch Deluxe is that it has not required the installation of expensive new equipment. The new burger is prepared on the same cooking equipment as the rest of the burger products. Franchise owners, who have already been on the hook for all the new McCafe equipment this year(estimated at $100,000 per store), would surely have pushed back hard if they been asked to invest in any more equipment. Even if the Angus fails completely it will not be the disaster that the Arch Deluxe became.
Conclusion: The Angus Third Pounder has been in test market for two years and McD's must have the data and confidence that this new product is going to hold its own and warrant the launch investment. From a taste, positioning, competitive, timing and operations perspective everything checks out. The ultimate test will be whether McD's can attract enough of the target market (young men) to its store despite its relatively stronger family appeal. As for me, I don't need to be indulging in 590 calorie burger experiences, however good they taste. Luckily for McD's, that doesn't matter. I'm definitely aged out of the target market.
Tuesday, August 25, 2009