McDonald's Shakes Up Menu - Analyst Blog


When McDonald's Corp. ( MCD ) brings about menu innovation, it grabs the attention of food lovers around the world. While the global fast food chain's success story was carved out of it signature offerings like golden arches, Big Mac and Happy Meals, the classic McDonald's fries carved a niche for themselves.

In an attempt to attract traffic to McDonalds' U.S. restaurants, these iconic fries are undergoing a makeover. Dubbed as Shakin' Flavor Fries, these French fries are being offered with flavored seasonings like garlic parmesan, spicy buffalo or zesty ranch.

The seasonings, which come in special packets, have to be poured and shaken along with the fries in specially-made mixing bags. This concept is being tested in three Northern Californian cities - Sacramento, Stockton and Modesto - in addition to St. Louis.

However, McDonald's is not pioneering an entirely new concept with the Shakin' Flavor Fries. A similar concept - Shake Shake - was debuted in some of the company's Hong Kong restaurants nearly a decade ago. The success of these fries led the company to introduce them at several McDonald's locations in China, India and Australia.

Even though seasoned fries in the U.S. are relatively new, Burger King Worldwide, Inc. ( BKW ) has already unsuccessfully tried out a similar 'Shake'em up Fries' almost a decade ago. Additionally, over the past few years, several smaller French fry specialty chains have begun to offer a variety of specialty seasonings, dipping sauces and toppings.

With the low-carbohydrate diet frenzy catching on in the U.S., in the last few years, the fast food chains has been scrambling to adapt through menu innovation. French fries have been especially high on the radar as it is one of the most popular ingredients in a meal. Back in 2008, McDonald's was the frontrunner in revolutionizing the French fries by removing trans-fat from all of its fries in the U.S.

In 2010, The Wendy's Company ( WEN ) launched its Natural Cut Fries with Sea Salt, with the potato skins on, to make the fries crispier and tastier. Last October, Burger King made waves in the fast-food industry by rolling out Satisfries - lower-calorie, lower-fat crinkle-cut fries.

Even though McDonald's has historically been the leader in the fast food industry, it is facing stiff competition in the domestic market in recent the years. Other fast food chains have started to focus on the different parts of the menu upon which McDonald's built its success: the breakfast items, the dollar menu, and frappes and coffee. In our view, menu innovation will help the company boost sales in the domestic market.

McDonald's currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is Buffalo Wild Wings Inc. ( BWLD ), which sports a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BKW , BWLD , MCD , WEN

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