McDonald's is serious about custom burgers

The fast-food king is expanding a new build-your-own-burger test, readying for battle against Red Robin, Smashburger and Five Guys.

By TheStreet.com Staff Apr 3, 2014 12:11PM

Marino Ahuatl works the drive through station at a McDonalds in Wheaton, Ill. (© Antonio Perez/Chicago Tribune/MCT via Getty Images)By Chris KatjeTheStreet


McDonald's (MCD) is taking its all-beef patties to a new level. The company wants to serve your burger your way -- and increase what you spend on your visit, too.TheStreet.com logo


The monster fast-food chain is testing burger customization in two locations -- targeting millennials and other hungry folks by allowing them to customize their burger using tablets before they get in line.


Tapping in to e-technology, McDonald's allows customers to select their bun, patty, cheese and toppings. The burgers are assembled fresh moments after the specialized order is received. 

In tests, McDonald's saw strong dinner crowds, while the average customized burger -- chosen from more than 20 premium toppings -- sold for $1 more than standard burger offerings on the menu. 

McDonald's is expanding its current test. The option is not expected to appear at all of its 14,000 locations, but if you add up all those extra dollars, it may tempt a corporate culture change.


Oddly, the build-your-own burger concept flies in the face of its assembly-line economies. McDonald's perfected fast food with excellence in speed, convenience and price. Now with strong competition in fast casual and a new business class of millennnials who want good food fast, McDonald's is struggling to keep up with its own ideals.


McDonald's could certainly use the boost of new burger sales. In the last fiscal year, global sales rose only 0.2 percent. This was powered by new stores and rebounding sales in the European region. U.S. sales at stores open more than a year declined 1.4 percent in the fourth quarter. This year, same-store sales continue to fall. February U.S. same-store sales fell 0.3 percent.


Once a fast-food innovator, McDonald's is battling its imitators not only for burger sales but for other meals as well. Yum Brands' (YUM) Taco Bell restaurants' introduction of breakfast items at its 6,000 stores is pushing the envelope at McDonald's, the fast-food breakfast leader.


McDonald's customizable burger also places it in a clash with other fast-casual favorites. Five Guys Burgers and Fries and Smashburger have seen strong unit growth as they continue to be popular with millennials and achieve cult-like followings. McDonald's possible addition of premium burgers also puts it in closer competition with national burger chains like Red Robin (RRGB).


Perhaps McDonald's needs to more closely follow the Red Robin footprint of creating specialized premium burgers. In 2013, Red Robin saw strong unit growth and same-store sales growth. This led to a 108 percent increase in share price.


McDonald's shares were up only 8 percent in 2013. This year, shares have gained around 1 percent and continue to trade in the middle of their 52-week range. 

With new menu offerings and higher guest check averages, McDonald's should be able to finally report positive same-store sales numbers later in 2014. Expect shares to follow suit and rise with the return to growth.

At the time of publication the author held no positions in any of the stocks mentioned.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.


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33Comments
Apr 3, 2014 12:53PM
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McDonald's DOESN'T REMOTELY COMPARE TO  Red Robin
Apr 3, 2014 2:29PM
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They can't get a batch of regular menu items right, how the hell are they going to get customized burgers right when nearly all customers are going to want it "their way"?
Apr 3, 2014 2:21PM
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Have it your way.......where have I heard that before? Oh, yeah.... Burger King!
Apr 3, 2014 4:03PM
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McD will try anything.

How about trying good food & clerks who speak English!!!

Apr 3, 2014 4:40PM
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McDonald's "assembly line" fast food was fine back in the early days when the food wasn't bad and you could get a SACK of food for $1 or $2, but when you have the pricing they have NOW, who wants to pay that for McDonald's typical "quality" when you can go just about anywhere else and get a much more palatable offering???   Thirty, forty years ago, I was a fan; now, I can't tell you the last time I went there.  Just too many other, better options!
Apr 3, 2014 1:48PM
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In-N-Out is the standard. All others pale in comparison. 
Apr 3, 2014 2:40PM
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Customers have been making special requests for a long time at MCD's and oterh fast food burger joints. This really isn't something new & innovative. big whoopity doo dah ling a lang a bang a rang!
Apr 3, 2014 2:08PM
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what a great ad for mcdonalds. wonder how much they paid for it.
Apr 3, 2014 1:31PM
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A bloody triple prime Ruby Tuesday burger is the burger of choice for me.


Not minwage worker fare.

Apr 3, 2014 3:22PM
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I still say build the best burger for the best price and they will come. Quit worrying about the dollar menu.
Apr 3, 2014 4:25PM
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Ronald McDonald may finally get a hard on after all.
Apr 3, 2014 4:26PM
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Speed way gas stations have had this type of order service for a long time. Just punch in what you want and the toppings and hit order. You can do this with drinks  and several other items.
Apr 8, 2014 4:45PM
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It's funny, McD serves like 70 million people a day but the only ones who apparently read MSN are hater's who probably have not stepped foot in the golden arches for years.
Why don't you haters drive over and see what's on the menu and try a few items. You just might be surprised,  or even delighted. 
Apr 7, 2014 3:28PM
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There will never be anything premium about Mcdonald's burgers. They need much higher quality meat to start moving in that direction.  Half the time you order something off the regular menu it's wrong. Good luck getting your "custom" burger the way you want.
Apr 3, 2014 5:00PM
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Here outside Chicago is Mike Ditka's restaurant. That's a real burger I get The Fridge burger almost impossible for me to eat it all and the great fries. # 2 is Portillos great burgers also, not as good as Ditka's. CORAVETTE. McDonalds everything even the coffee tastes the same yuk.
Apr 30, 2014 10:07PM
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The last burger I ordered at McDonalds was ordered with extra onions. The burger I got only had ketchup. I waited in line to get a replacement, just got a blank stare when I explained what happened. What are the chances they can handle a custom burger order and give it to the right customer? 
Apr 21, 2014 6:24PM
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lol i doubt the burgers will be fresh.  Newly assembled from the same old dog food but definitely not fresh.
Apr 3, 2014 8:00PM
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For Burger chains it's Five Guys hands down!
Apr 3, 2014 7:15PM
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What makes this an interesting development is that McDonalds created the fast-food model to begin with, in the 1950s: limited menu, no substitutions or special orders, no table service, emphasis on speed and standardization.

This move goes against all that. They were forced into it by competitors because they can no longer undercut other chains on price.

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