According to Chris Graley who writes a blog at the Motley Fool a popular site for the investors, Mickey D’s is going ahead with a premium “Angus” burger that they have been working on for the last 2.5 years.
The new burger is 1/3 pound and will cost $3.99. For most companies, announcing a premium product in a down economy is a death sentence, but I think it’s a fabulous idea for MCD.
1st, they’ve caught up with Yum Brands in emerging market growth.
2nd, the McCafe concept has taken off like a rocket.
They get continued growth prospects in Asia and steal market share from Starbucks at home in a down economy at the same time.
So why ruin that with a premium offering in a down economy? They aren’t! They are actually enhancing it!
People are still gonna eat at MCD because it’s the cheapest place to eat out. We have bigger problems if people stop eating there. They are picking up a bunch of people that are used to eating at “Friday’s”, “BW3″,”Applebees” ect…, that are used to paying $6- $9 for a burger. They also have their own customers that buy the most expensive burgers on the menu because they feel like kings at MCD despite their meager incomes.
They are probably losing share on that last group as people cut back and that is why their timing is perfect to fill in the gap with the first group. It also helps them long term if some of those new customersl like the $4 burger better than the $6-$9 burgers they are used to. The only thing that can kill this is over-marketing like they did with they “Arch-Deluxe”. Other than that, this is a cheap experiment and if it works, it helps the win new customers, increase profit margins, and creates customer interest all at the same time.