BURGER BREAK­THROUGH AT MC­DON­ALD'S

Fast Company - - Cotents - BY JONATHAN RINGEN

In­side the fast-food gi­ant’s am­bi­tious quest to woo con­sumers who want fresher fare—one Quar­ter Pounder at a time.

US­ING FRESH—NEVER FROZEN—BEEF IN ITS QUAR­TER POUNDERS IS JUST ONE PART OF A MAS­SIVE TRANS­FOR­MA­TION THE COM­PANY IS UN­DER­GO­ING IN THE FACE OF CHANG­ING CON­SUMER TASTES AND COM­PE­TI­TION. BUT IT’S DEF­I­NITELY THE MOST COM­PLI­CATED.

AA CRYP­TIC MISSIVE WENT OUT LAST SPRING TO all 3.6 mil­lion peo­ple who follow Mc­don­ald’s on Twitter. The tweet read, simply: “100% Fresh Beef + John Good­man = ASMR(ISH)” and included a link to a video. In the splitscreen clip, the Big Le­bowski and Roseanne star stares into the camera and—some­what un­nerv­ingly—whis­pers a car­nal ode to the fast-food gi­ant’s Quar­ter Pounder burger, ac­com­pa­nied by the sounds and vi­su­als of an ap­pe­tiz­ing-look­ing patty siz­zling on the grill. “Hey, you,” Good­man mur­murs in­tently. “Mc­don­ald’s new fresh-beef Quar­ter Pounder is hot­ter and juicier. It’ll leave you speech­less. I can al­most feel that juice siz­zling .... Oh baby, the melted cheese is hug­ging ev­ery cor­ner of that grilled patty .... That cheese is so hot, so melty.” ¶ ASMR videos, named for au­ton­o­mous sen­sory merid­ian re­sponse, typ­i­cally star care­fully primped young women tap­ping on ob­jects and whis­per­ing into high-end mi­cro­phones with the in­tent of cre­at­ing a pleas­ant fris­son in view­ers, whereas this one fea­tured a large man wax­ing near porno­graph­i­cally about a burger. But the spot was a vi­ral hit, quickly rack­ing up more than 3 mil­lion views. It was timed to the ar­rival—at ev­ery one of the restau­rant chain’s 14,000 U.S. out­posts—of fresh, never-frozen beef pat­ties in its sig­na­ture Quar­ter Pounder burg­ers, a change that ex­ecs say has been as seis­mic for the com­pany as the in­tro­duc­tion of all-day break­fast, in 2015, or even the drive-through win­dow, which Mc­don­ald’s be­gan ex­per­i­ment­ing with in 1975. (The new patty is also available in the chain’s more pre­mium Sig­na­ture Crafted Recipes line of burg­ers, but not yet in Big Macs or its ba­sic ones.)

Over the course of in­ter­views with five top ex­ec­u­tives, I never once heard any­one men­tion Shake Shack (110 U.S. lo­ca­tions) or In-n-out (334 restau­rants) by name, but Mc­don­ald’s has clearly been study­ing these chains—both of which serve fresh beef—along with their mil­len­nial cus­tomers who don’t find frozen pat­ties ap­pe­tiz­ing. “We were hear­ing from con­sumers that our burger wasn’t good enough, and we’ve seen a lot of trends around ex­pec­ta­tions of high qual­ity,” says the com­pany’s new chief mar­ket­ing of­fi­cer, Mor­gan Flat­ley, who ar­rived at Mc­don­ald’s from Pep­sico a year ago. “To be able to de­liver that at the speed and scale of Mc­don­ald’s was a unique op­por­tu­nity for us,” she says.

Fresh beef is just one el­e­ment of a mas­sive trans­for­ma­tion un­der way at Mc­don­ald’s. Steve Easter­brook—a Mc­don­ald’s vet­eran who had also run Bri­tish ca­sual-din­ing chains Piz­za­ex­press and Waga­mama—was el­e­vated in 2015 from chief brand of­fi­cer to CEO at a time of real cri­sis. The chain had been suf­fer­ing losses for six straight quar­ters, with net in­come down 15% from the year be­fore. The iconic BIL­LIONS SERVED signs didn’t quite start rolling back­ward, but be­tween 2012 and 2016, Mc­don­ald’s for­feited a stun­ning 500 mil­lion trans­ac­tions in the U.S., both to its typical com­peti­tors and a new wave of fast-ca­sual spots like Shake Shack and Sweet­green. “We’d lost a mean­ing­ful con­nec­tion with cus­tomers,” says Easter­brook, who sounds a bit like a younger Michael Caine. “They weren’t ex­cited about what we were do­ing, and that would be fairly univer­sal on a global ba­sis. So we ral­lied around a turn­around plan.” Mc­don­ald’s stock is up 60% since Easter­brook took over, but it has listed down­ward for much of 2018 as same-store U.S. sales growth has cooled from 4.5% to 3%. Con­sumers and in­vestors alike are de­mand­ing more.

Now the com­pany and its fran­chisees— owner-op­er­a­tors who typ­i­cally sign a 20-year agree­ment for each restau­rant and con­trol more than 90% of the U.S. chain—are em­bark­ing upon its big­gest in­no­va­tion test in years with the roll­out of the new Quar­ter Pounders. Can a com­pany that’s fa­mous for its pre­dictabil­ity suc­ceed

in sell­ing a fresh-beef ham­burger—with all the lo­gis­ti­cal and food-safety risks that en­tails—at the scale, speed, and price its cus­tomers ex­pect?

THE BRAND-NEW HEAD­QUAR­TERS

of Mc­don­ald’s, a nine-story open-plan of­fice tower, are in the ris­ing Chicago neigh­bor­hood of the West Loop. From 1971 un­til this past June, the com­pany op­er­ated out of a park­like cam­pus in sub­ur­ban Oak Brook, Illi­nois, 20 miles out­side of the city. Now it’s on a stretch of West Ran­dolph Street that is cur­rently Chicago’s hottest restau­rant row. “We felt like it would get us closer to our cus­tomers, closer to the com­pe­ti­tion, closer to the trends that are shap­ing so­ci­ety,” says Easter­brook. Plus, he notes, it’s good for re­cruit­ing: “The tal­ent tends to be liv­ing down­town.” The young cor­po­rate em­ploy­ees tot­ing Sweet­green bags back across the street to their of­fice dur­ing a re­cent lunch hour—be­cause who can eat Mc­don­ald’s ev­ery day?—demon­strate that Easter­brook’s plan is al­ready tak­ing hold. Sev­eral told me ex­cit­edly about the ex­panded lunch op­tions the new HQ will pro­vide.

The Mc­don­ald’s café in the lobby of the build­ing has one fea­ture you won’t find any­where else: a ro­tat­ing se­lec­tion of re­gional items from out­posts around the world, in­clud­ing a spicy­chicken sand­wich from Hong Kong. The limited avail­abil­ity of these items has turned out to be a canny mar­ket­ing move, spark­ing a flood of so­cial me­dia in­ter­est and press cov­er­age, but the space is also, clearly, a test lab. Menu chief Linda Van­gosen, who joined Mc­don­ald’s from Starbucks last year, works closely with chefs and food sci­en­tists at Mc­don­ald’s sup­pli­ers and keeps a close eye on food trends, which have to reach a cer­tain level of mass ap­peal to make sense for Mc­don­ald’s. She and her team also con­duct ethno­graphic re­search, in­clud­ing shad­ow­ing cus­tomers to see how Mc­don­ald’s fits into their lives, and take what Van­gosen refers to as food sa­faris, eat­ing their way across Amer­ica. “If we want to find great cof­fee, we’ll prob­a­bly go to the West Coast,” she says. “For burg­ers, it’s prob­a­bly some­where in the South.”

A key in­sight she’s learned is that what con­sumers say they want, and what they ac­tu­ally buy, are two dif­fer­ent things, which presents an in­ter­est­ing challenge. “That’s kind of the se­cret sauce,” Van­gosen says. “What’s an emo­tional need you can an­swer?”

The com­pany had been re­ceiv­ing con­sis­tent feed­back from a wide range of con­sumers in re­cent years—both via fo­cus groups and from un­so­licited com­ments—that its beef patty, the cor­ner­stone of its busi­ness, was sub­par. But fig­ur­ing out ex­actly what cus­tomers found un­sat­is­fy­ing took time. Even­tu­ally, Mc­don­ald’s de­ter­mined that the burger was too dry and didn’t ar­rive hot enough, and ex­ec­u­tives dis­cerned that the cul­prit in both cases was the flash-freez­ing process the pat­ties had been sub­jected to. “We looked at a lot of things— raw ma­te­rial, fat con­tent, grind—for the right taste and tex­tu­ral el­e­ments,” Van­gosen says, not­ing that this work be­gan well be­fore her ar­rival.

They found that the patty it­self didn’t have to change, just the way it was han­dled. Keep­ing the meat fresh and cook­ing each burger to or­der im­proves the eat­ing ex­pe­ri­ence im­mensely. “The game changer turned out to be serv­ing it hot off the grill,” she says, adding that the never-frozen pat­ties cook in 60 to 80 sec­onds—about a minute faster than frozen ones—which also helps off­set the added time it takes restau­rant work­ers to start cook­ing each burger as soon as it’s or­dered. Mc­don­ald’s de­clines to re­veal the costs as­so­ci­ated with the new patty, be­yond say­ing that it is not ap­pre­cia­bly more ex­pen­sive to pro­duce than the frozen ver­sion, and that con­sumers won’t see an in­crease in price. “I haven’t seen data on this,

THE COM­PANY HAS HOMED IN ON ITS ES­SEN­TIAL PROD­UCT: A HAM­BURGER, THE BIG­GEST, BURGERIEST HAM­BURGER MC­DON­ALD’S SELLS.

but if I had to guess based on other restau­rants, I’d say it costs Mc­don­ald’s a lit­tle more,” says in­dus­try an­a­lyst Mark Kali­nowski, of Kali­nowski Eq­uity Re­search. “But we’re get­ting a lot of evidence that they are sell­ing well.” Kali­nowski says that the av­er­age Mc­don­ald’s does twice the busi­ness of an av­er­age Burger King or Wendy’s. (Wendy’s, which has long served nev­er­frozen pat­ties, re­cently took the op­por­tu­nity to mock its big­ger com­peti­tor on Twitter: “Hey @Mcdon­alds, heard the news. Happy #Na­tional Frozen­food­day to you for all the frozen beef that’s stick­ing around in your cheese­burg­ers.”)

Mc­don­ald’s be­gan test­ing fresh-beef Quar­ter Pounders nearly two years ago at restau­rants in Tulsa, Ok­la­homa, and Dal­las, mar­kets se­lected be­cause they are se­ri­ous burger coun­try. The re­sponse was con­clu­sive: More than 90% of cus­tomers dis­tinctly pre­ferred the new burger. It’s been a hit with crit­ics too. “The meat was ten­der, it tasted fresh and de­li­cious, with that clas­sic whiff of black pep­per Mc­don­ald’s uses,” said one Food & Wine re­view. “To boot, there was a nice bit of char around the edges. Simply put, there was no dis­guis­ing the fact that this meat is a fairly sig­nif­i­cant up­grade from Mc­don­ald’s as usual.”

In ad­di­tion to taste, to­day’s restau­rant-go­ers in­creas­ingly care about the prove­nance of the food they con­sume. At Sweet­green (91 lo­ca­tions), for in­stance, an em­ployee writes the names of the farms that sup­plied the sea­son’s in­gre­di­ents on a chalk­board in the restau­rant. Shake Shack pub­lished a cook­book last year that high­lights its lo­cal pur­vey­ors. While moves like these are im­pos­si­ble at the scale of Mc­don­ald’s, the chain has been tak­ing grad­ual steps in these up­starts’ di­rec­tion. The com­pany com­mit­ted in 2016 to us­ing ex­clu­sively cage-free eggs by 2026. Its chicken is now free of most an­tibi­otics, which has been the pol­icy in the U.S. since last year (though the Hu­mane So­ci­ety thinks these changes don’t go far enough). Mc­don­ald’s also re­cently an­nounced it would stop us­ing plastic straws in the U.K. by 2020 and be­gin test­ing al­ter­na­tives in the U.S. Gen­er­ally, the com­pany has be­come more trans­par­ent about its sourc­ing in the post–fast Food Na­tion era, dis­tanc­ing it­self from the in­dus­trial food pro­cesses it for­merly em­ployed that had so dis­gusted con­sumers, in­clud­ing in­cor­po­rat­ing “pink slime”—beef castoffs treated with am­mo­nia—into its burg­ers.

But fresh beef is many or­ders of mag­ni­tude more chal­leng­ing than any menu update thus far, and more sig­nif­i­cant to the com­pany over­all. “We thought, How do we make the big­gest difference to the most cus­tomers in the short­est pos­si­ble time?” says Easter­brook. Rather than play­ing de­fense against crit­ics by adding a health­ful—and po­ten­tially un­pop­u­lar—op­tion to the menu, the com­pany has homed in on its es­sen­tial prod­uct: a ham­burger, the big­gest, burgeriest ham­burger Mc­don­ald’s sells.

ON A LATE-SPRING TUES­DAY,

not long af­ter the new patty be­gan be­ing served na­tion­wide, Christa Small, one of the com­pany’s top op­er­a­tions ex­ec­u­tives and the per­son whose team was re­spon­si­ble for com­ing up with the pro­ce­dures that make fresh beef pos­si­ble, vis­its a Mc­don­ald’s near the old cam­pus in Oak Brook. It’s hard to imag­ine any­one you’d trust more with the task of mak­ing sure the big­gest restau­rant chain in the world can safely sell a po­ten­tially pathogen-car­ry­ing prod­uct to mil­lions of cus­tomers a day. Small is friendly but in­tensely fo­cused, with a tiny Golden Arches pin on her lapel. She’s worked for Mc­don­ald’s her en­tire ca­reer, be­gin­ning with a “crew mem­ber” po­si­tion at a restau­rant in sub­ur­ban Chicago, fol­lowed by a cor­po­rate in­tern­ship the sum­mer be­fore her fresh­man year at Uni­ver­sity of Michi­gan, where she stud­ied elec­tri­cal engineering (she also has a mas­ter’s in com­puter engineering). She has served in a wide va­ri­ety of roles at the com­pany, from the IT depart­ment to help­ing de­velop the au­to­mated bev­er­age ma­chine.

Food safety, es­pe­cially in the wake of Chipo­tle’s dis­as­trous E. coli out­breaks in 2015 and 2016, which hurt both its busi­ness and its brand,

IN CRAFT­ING THE NEW QUAR­TER POUNDER, MC­DON­ALD’S HAS SUB­TLY IM­PROVED THE EN­TIRE SAND­WICH, AD­JUST­ING GRILL TIME AND THE BUNTOASTING PROCESS.

is clearly a pri­or­ity for Mc­don­ald’s. The com­pany’s sup­pli­ers have spent around $60 mil­lion to en­hance equip­ment and sys­tems, in­clud­ing new re­frig­er­a­tion and food-pack­ing tech­nol­ogy. (Lopez Foods, which sup­plies restau­rants in the Texas and Ok­la­homa re­gion, led the pi­lot pro­gram to de­velop a process to pro­duce, pack, and ship fresh pat­ties.) The dis­tri­bu­tion cen­ters and cold trucks were also re­vamped, to en­sure that the pat­ties would be kept ap­pro­pri­ately cool yet at no point be ex­posed to freez­ing tem­per­a­tures, ren­der­ing the whole fresh-meat ini­tia­tive moot.

The main equip­ment in­vest­ment Mc­don­ald’s fran­chisees have had to make for the fresh-beef switch is a squat, two-drawer re­frig­er­a­tor. (“Do [fran­chisees] like writing big checks?” Easter­brook asks. “Of course they don’t! But if there’s a strong busi­ness case be­hind it, they’ll nat­u­rally want to invest.”) Small’s group also de­vel­oped new “small wares” for the process, in­clud­ing trays and tongs that are only used with the new pat­ties. Most cru­cially, she and her team de­vel­oped a manda­tory cur­ricu­lum for the han­dling, cook­ing, and serv­ing of fresh-beef pat­ties. “It’s the most in­ten­sive train­ing process we’ve ever done for a new prod­uct,” she says. “We re­ally want to make sure we main­tain our rep­u­ta­tion in re­gards to food safety.”

In craft­ing the new Quar­ter Pounder, Mc­don­ald’s has made sub­tle im­prove­ments to the en­tire sand­wich, ad­just­ing grill time and the bun-toast­ing process, for ex­am­ple. But the big­gest change is in the la­bor process to pre­pare it. Mc­don­ald’s switched from batch cook­ing to pre­par­ing each Quar­ter Pounder when or­dered. This re­quired fun­da­men­tal shifts in kitchen cul­ture and train­ing. “It takes them a minute to un­der­stand that I want them to re­act as soon as a cus­tomer or­ders,” Small says of em­ploy­ees. “I want you to get the patty down, I want you to

Pho­to­graphs by Joel Stans

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