How American fast food tastes are changing

January 26, 2015

Are America’s fast food tastes becoming more refined?

Even as the U.S. confronts an obesity epidemic, there are signs that Americans’ tastes in fast food are becoming more healthier and more selective. While “fast casual” restaurants like Starbucks and Chipotle flourish, McDonald’s and other traditional fast food chains struggle to remain fresh in both the minds of their customers and their menus.

As this Reuters graphic shows, last week’s earning report showed fourth quarter estimated earnings per share at $1.13, missing analysts’ estimates and reflecting a 21 percent drop in net income. Meanwhile Starbucks, which also reported earnings last week, projected growth of 16 percent to 18 percent for the coming year, and Chipotle, which will have its fourth quarter earnings call next week, enjoys a price-to-earnings ratio that boasts multiples of the traditional average of 15.

Time’s Brad Tuttle addresses the continuing trend:

Neither McDonald’s recent struggles nor the success of fast casual players such as Starbucks, Panera Bread, and Chipotle should come as a surprise. The core fast-casual pitch—food and drink that’s higher quality and yet only marginally more expensive than fast food—is one that consumers have been buying into for years.

Starbucks’ use of gift cards and its mobile app have helped spur growth, while Chipotle proudly points to its Food With Integrity ethic. Both concepts innovatively cater to an increasingly thoughtful consumer base. Meanwhile, McDonald’s struggles operator complaints of inefficiencies as they look to trim and recraft an unwieldy menu. McDonald’s is trying to counter with a “gourmet” Create Your Taste dining experience, but they’ve unsuccessfully tried this before, so it could be a tough slog to prove to fast food diners that they deserve to keep a place at the table.

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McDonald’s has some hidden savings if they are willing to give up some legacy items. Change the Big Mac by eliminating the third(middle)bun piece. That reduces food cost and preparation time. Call the new sandwich Medium Mac. Stop using the sesame seed bun. Go with a good plain bun for the same cost. The dollar menu has a the McDouble. The cheese in the McDouble drives up the cost to the customer by 20 to 30 cents. Eliminate the cheese and lower the cost. You would end up with a real value for somewhere between $0.99 and $1.19.

Consider changing your French Fries. Quadruple the cross section of the fries. Similar to steak fries. The thicker fries would retain their heat longer. Go au natural. Clean the potato, but leave the skin on.

Posted by davidhoffman5 | Report as abusive