McDonald's, Burger King serve up premium gourmet burgers
FALLS CHURCH, Va. -- It's Friday night and Mehdi Hatim and his wife, Beverly, are doing something they've never done: having a dinner date at McDonald's.
It isn't just the recession that lured the couple from nearby Vienna, Va. It's also McDonald's new Angus Third Pounder burger. At $3.99, it's the most expensive burger the chain has sold, and if the "premium" burger is a hit, it could jolt the dynamics of the $566 billion restaurant industry.
"McDonald's is so secure in its own market that now it's going after casual dining," the next level up in the restaurant business, says Hatim, a cemetery manager. Hatim has never spent this much for a fast-food burger, but he's back with his wife after trying it once. Why? "For four bucks, this is hard to beat."
Recession be damned, consumers are saying "no" to cheapo burgers. When they head to a fast-food burger joint to save money, many are spending more than ever. It's not as contradictory as it seems: The Angus premium burger can cost more than $6 as part of a Value Meal, but that's still cheaper than the $8 to $12 price of such burgers at sit-down casual dining eateries, so it feels like a bargain.
"It may be the last affordable luxury," says Christopher Muller, restaurant management professor at University of Central Florida. "It's an easy way to reward yourself without feeling you've blown the bank."
The fast-food giants are pushing premium burgers with gusto. McDonald's Angus Third Pounder, rolled out nationally this summer, is the trend's 500-pound gorilla. Earlier this year, Burger King began to install new broilers in most stores to handle meatier offerings, such as its Steakhouse XT Burger. Wendy's won't talk about it yet but plans next month to launch the Bacon Deluxe, a premium bacon cheeseburger. Jack in the Box is in the mix with Mini Sirloin Burgers.
The premium burger trend started in casual dining restaurants and continues there. Family chain Denny's in October will begin selling a premium line dubbed Better Burgers — less bun and more burger. By going more upscale as consumers are trading down, fast-food restaurants are coaxing away former casual dining customers.
Premium burgers are a path to better same-store sales growth for restaurants, says Ron Paul, president of industry consultants and researcher Technomic. "It gets folks to spend more money — without raising prices."
