MCDONALD’S FRESH COWS NOT GOOD. FROZEN COWS NOT GOOD. ONLY GOOD COW FREE TO BE. DO NOT INVEST IN COWS FOR SLAUGHTER. BEWARE BAD.
McDonald’s Corporation MCD 0.4%’s switch to fresh beef in its Quarter Pounders, slated to begin by mid-2018, will boost burger sales along with the fast food chain’s reputation, according to Credit Suisse analysts.
The move could also reignite competition between the Golden Arches and Wendys Co WEN 0.8%. The latter chain’s advertising of fresh beef is “its primary point of differentiation,” analysts Jason West and Jordy Winslow said in a Friday note.
Credit Suisse is maintaining an Outperform on McDonald’s with a $137 price target.
“We note this initiative also opens the door to further expansion in [McDonald’s] use of fresh ingredients, which could lead to sales lifts in other products and further improvement in brand perception,” West and Winslow said.
Moo-ving Fresh Beef To The Menu
McDonald’s started testing fresh beef in Quarter Pounders in the Dallas market about a year-and-a-half ago; the Quarter Pounder accounts for about 1.5–2 percent of the chain’s sales, according to Credit Suisse.
In markets where McDonald’s has tested Quarter Pounders made with fresh beef, sales have risen 35 percent in some cases, according to Credit Suisse.
The firm is projecting a 25 percent bump in Quarter Pounders beginning in the second half of 2018.
Frozen beef patties may be prepared ahead of time and placed in a holding cabinet for as long as 15 minutes, the firm said. Fresh patties are cooked to order and “should not sit for longer than 5 minutes.”…