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McDonald’s tops menu with Angus burgers

New sandwiches are chain’s first since Big N’ Tasty

The new Angus hamburgers are expected to cost about $4. One is topped with hickory-smoked bacon. The new Angus hamburgers are expected to cost about $4. One is topped with hickory-smoked bacon. (Jeff Kauck/Mcdonald’S Corp.)
By Courtney Dentch
Bloomberg News / July 2, 2009
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NEW YORK - McDonald’s Corp. will introduce the first new line of hamburgers since 2001 across the United States today to broaden its menu beyond the value meals and $1 fries that have attracted customers in the recession.

Three new Angus burgers are 1/3 of a pound each and priced at about $4, Dan Coudreaut, executive chef for the Oak Brook, Ill.-based company, said in a phone interview. The burgers will be available nationwide for several months, said Marta Fearon, director of marketing.

The more expensive burgers will have to overcome the slowdown in US consumer spending as people eat at home more often, said Tom Forte, an analyst with Telsey Advisory Group in New York. Meals that combine sandwiches, fries, and a drink, as well as $1 menu items, have helped drive monthly sales growth for McDonald’s.

“Given the recession, it’s harder to sell a premium item,’’ said Forte, who has a $67 to $69 price target on the stock. “It’s important that they have a menu that offers both premium and value.’’

McDonald’s, the world’s largest restaurant company, rose 73 cents to $58.22 in New York Stock Exchange composite trading. The shares have lost 6.4 percent this year.

The company began developing the Angus burger about two years ago after franchisees in Southern California asked for a premium offering to compete with regional burger chains, Coudreaut said. The company has been adding chicken sandwiches as poultry gained popularity with diners, as well as less expensive items such as the McDouble.

The franchisees “thought there was a gap at the top end of the menu,’’ Coudreaut said. “We realized we needed to consider this as a category.’’

The burgers could pull sales away from their core menu of Big Macs and Quarter Pounders, said Darren Tristano, an executive vice president at Technomic Inc., a Chicago-based restaurant consulting firm.

“The Angus is going to upsell someone who would have bought a Big Mac or Quarter Pounder,’’ Tristano said. “It’s less likely to attract new customers than cannibalize existing ones.’’

The new offerings did not hurt core menu sales during two years of tests at 500 restaurants in Los Angeles, New York, Columbus, Ohio, and Albuquerque, Coudreaut said. The burgers drew interest from some new and infrequent customers as well as existing patrons, Fearon said.

The new burgers feature a braided sesame seed bun, a thicker tomato slice, and red onion, Coudreaut said. The Big N’ Tasty was the last burger McDonald’s introduced, in 2001.

In California, the Angus burgers will compete with offerings from regional chains. Carl’s Jr. sells the Original Six Dollar Burger, styled after larger sandwiches made at table-service restaurants. In-N-Out Burger and Fatburger Corp. also offer bigger burgers.

Burger King Holdings Inc., the second-largest burger seller in the United States, is upgrading its broilers to make premium beef sandwiches later this year. Wendy’s/Arby’s Group Inc. is also testing a new signature burger.