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Is McDonald's Going Fast Casual?

Is McDonald's Going Fast Casual?

McDonald’s Corporation (NYSE: MCD) has been experimenting in an effort to combat falling sales.

The company in September installed several build-your-own-burger kiosks in Southern California. At the stand-alone kiosks, customers could add one or more of nearly 20 toppings to one or two beef patties on a bun or roll. Choices also included four different types of cheese.

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Double Whammy

The purpose of installing the kiosks, according to Bloomberg, was twofold.

First, in a nod to Burger King Worldwide Inc.'s (NYSE: BKW) “have it your way” slogan, the kiosks would allow customers to customize their sandwiches.

Second, by monitoring the most popular combinations, McDonald’s would be able to run a virtual test kitchen in selected stores in an attempt to identify the next big "McHit" with fast food diners.

McDonald's has now expanded the idea to Australia.

The Down Under version of the company’s "Create Your Taste" kiosk features touch screens where customers build their burger then either pay at the machine with a credit card or go to the counter to pay in cash.

Fast Casual In The Making

In Australia, after placing their order at the kiosk, customers would be able to indicate that they were dining in and, if so, their food brought to them on a wooden tray with fries in a metal basket.

With several fast casual restaurants, including privately owned Chili’s and DineEquity, Inc’s (NYSE: DIN) Applebee’s going to table-based tablet ordering and payment systems, McDonald’s seemed to be headed roughly in the same direction from the world of fast food.

All Part Of A Movement

McDonald's is not alone in the quick-service sector in making changes to appeal to fast casual diners.

Restaurant News reported in January that some of the largest fast food franchises in the United States had started an evolution toward fast casual in an effort to compete.

In addition to McDonald’s, also named were Domino’s Pizza Inc (NYSE: DPZ) along with Yum! Brands, Inc.’s (NYSE: YUM) KFC and Pizza Hut.

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Would It Work?

Whether McDonald’s apparent move toward fast casual would work remained a question.

With “Create Your Taste” burgers plus fries, costing upward of $10 in Australia, a question also remained about whether customers would be willing to pay fast casual prices at a place like McDonald’s.

Dennis Lombardi of Columbus, Ohio-based WD Partners told Restaurant News that quick-service chains like McDonald's must be willing to test new things.

"I've never ever to my knowledge knocked a brand for experimenting,” Lombardi said.

At the time of this writing, Jim Probasco had no position in any mentioned securities.


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