Fresh Beef Serves McDonald’s Well

McDonald's fresh beef double Quarter Pounder. ( McDonald's )

A year ago McDonald’s announced it would only serve fresh beef in its Quarter Pounder, forgoing the frozen patties that had been its staple. The results have been outstanding, with sales up an average of 30%.

“Our customers are loving it,” Marion Gross, McDonald’s senior vice president of supply chain management, told USA Today. “We sold 40 million more Quarter Pounder burgers nationally in the first quarter of this year compared to the quarter in 2018.”

Gross said the burgers are hotter and juicer than frozen beef. Wendy’s, Culver’s, Five Guys, Whataburger, Shake Shack, In-N-Out Burger and Smashburger also promote using fresh, not frozen, beef.

“Our customers tell us they have an interest in understanding where it comes from, what goes into it and how is it prepared,” Gross said. “We’re trying to be more transparent and make some necessary changes to delight our customers as we embark on our journey to be a better McDonald’s.”

The change to fresh beef is also helping boost McDonald’s stock price. McDonald’s stock price has hit an all-time high 18 times so far in 2019, on average about 17% higher than a year ago.

Fast-food stock prices such as Chipotle and Shake Shack, in addition to McDonald’s, have benefitted from America’s economic growth.

Steve Chiavarone, portfolio manager at Federated Investors, told CNBC, “The consumer has remained strong despite some headline noise out there. You’ve got good unemployment numbers, moderate wage growth — maybe a little bit better than moderate wage growth — [and] gas prices have been relatively well behaved. So, overall the consumer is looking healthy.”

Chiavarone adds that a number of these companies are adapting to changing demographics and tastes and their evolution is paying dividends. McDonald’s, for example, has introduced self-serve kiosks, all-day breakfast, and higher-quality ingredients in the past several years.

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