McDonald’s tests Chicken McGriddle in Ohio: Report

Provided by CNBC

McDonald’s (MCD) is reportedly testing the Chicken McGriddle, a chicken-and-pancake breakfast sandwich, in Ohio.

While the Chicken McGriddle has been offered as part of McDonald’s unofficial secret menu, Columbus Business First reported that the fast food giant is testing the item in 11 restaurants in central Ohio.

The sandwich is essentially a McChicken with maple-flavored pancakes in place of the normal buns, the publication said. The item requires testing locations to add chicken to its breakfast hours, according to Columbus Business First.

The report said the Chicken McGriddle will be available until March 27. The testing locations will experiment with two price points: $1.49 and $2, according to Columbus Business First.

The publication also reported the Chicken McGriddle test will not be supported with advertising.

McDonald’s did not immediately respond to a request for comment from CNBC.

Written by Christine Wang of CNBC

(Source: MSN)

‘Fast Food’ Becoming a Dirty Term in Restaurant Industry

Getty Images/Justin Sullivan 

NEW YORK — Fast food is becoming a dirty term.

As smaller players challenge fast-food chains like McDonald’s and Burger King, they’re fighting to set themselves apart by describing their food as “fast-casual,” ”fine casual,” ”fast crafted” and even “fan food.” That’s even though they follow the same basic format: People standing in a line to order and pay a cashier for their food.

The new phrases are being embraced as companies try to position their offerings as fresher or higher quality to distance further their menu items from the stigma that fast food is greasy, cheap and unhealthy.

Even traditional fast-food chains acknowledge they have an image problem. McDonald’s Corp. has said it wants to transform into a “modern, progressive burger company.” And Yum CEO Greg Creed has noted the need for the company’s Taco Bell, KFC and Pizza Hut chains to redefine the meaning of fast food, which is seen as industrial and impersonal.

In the meantime, others are cooking up phrases to telegraph that they are anything but fast food.

Chipotle Mexican Grill Inc. and Panera Bread Co. are widely referred to in the industry as “fast casual” chains, a term meant to convey that they serve dishes that are in line with what people might find at a casual, sit-down restaurant. Shake Shack, the New York City-based burger chain, took it a step further last year when it declared itself to be “fine casual.”

In a filing with the Securities and Exchange Commission, Shake Shack explained: “Fine casual couples the ease, value and convenience of fast casual concepts with the high standards of excellence in thoughtful ingredient sourcing, preparation, hospitality and quality grounded in fine dining.”

Even Arby’s, whose food has been mocked on The Daily Show by former host Jon Stewart, is trying to change its image and has started calling itself “fast crafted.”

Chris Fuller, a spokesman for Arby’s, said the chain came up with description after holding “Brand Camp” meetings with employees around the country in 2014. Workers were given cards with the names of restaurant chains, and told to lay them out in order, with “fast-food” representing one end and “fast casual” representing the other end. Arby’s always fell somewhere in the middle, Fuller said.

As a result, he said the chain realized it offered the convenience of fast-food, but also offers “that made-for-your care” with its sandwiches.

When asked how he thought Stewart might react if he were still on The Daily Show, Fuller said: “I think he would come up with his own term, but I’m sure he would have some fun at our cost.”

Arby’s isn’t alone, of course. Del Taco says it considers itself to be “QSR-plus,” a reference to the industry term “quick service restaurant” that’s used to refer to fast-food. And Dairy Queen’s tag line is “Fan Food Not Fast Food.”

Allen Adamson, founder of BrandSimple Consulting, said the trend shows the term fast-food has become the “death star” of the industry.

Adamson noted there was a time when the idea of getting food quickly was a unique concept, but that restaurants can no longer rely on speed alone to attract customers.

“Everything can be fast today. What you want to communicate is something more desirable,” he said.

Written by Candace Choi of Associated Press

(Source: MSN)

Yum! Brands Not the Only Fast Food Giant Facing Pain from China

© TheStreet
© TheStreet

NEW YORK (TheStreet) — One byproduct of a slowing Chinese economy appears to be that its huge population is cutting back on its consumption of fast food and casual dining fare.

At least that was the sense gleaned from one of the largest operators in the country Yum! Brands earlier in the week. The fast food giant, which has a combined 6,867 KFC and Pizza Hut locations open in China, reported dreadful third quarter results in China and served up dour commentary on consumer demand that rocked the industry.

“In recent weeks, we’ve seen companies cut back on parties, dinners and entertaining — so, while our weekend business is doing okay, this has impacted our weekday dinner results significantly,” explained Yum! Brands CEO Greg Creed on the company’s third quarter earnings call Wednesday. Same-store sales at KFC China increased a paltry 3%, while those for Pizza Hut’s China division fell 1%.

At KFC’s China division, Creed acknowledged that the recovery from a high-profile food supplier issue in 2014 is occurring more slowly than expected, in large part due to surprising economic weakness. The situation at Pizza Hut was even more alarming.

According to Creed, in late August and continuing into September, the company witnessed a “very substantial deceleration in same-store sales” in China versus what had been forecast. Creed and other execs blamed volatile financial markets and the yuan deflation for the slowdown, both of which occurred as the company was introducing an important premium-priced steak product.

Yum! Brands’ bombshell on China, which led to an 18% plunge in its stock on Wednesday, comes as many companies are banking on continued strong growth in China’s fast food industry. In a new report released this month, research firm IBISWorld estimated that the country’s fast food sector will generate $121.7 billion in sales in 2015, up 9.7% from 2014. Over the five years through 2015, IBISWorld estimated the industry’s revenue has been growing at an annualized rate of 11.6%.

And that favorable outlook has been echoed elsewhere. “Constantly revamped menus featuring localized dishes, together with the family-concept dining environment, is expected to underpin the stable growth,” said Euromonitor International back in July.

TheStreet takes a look at four other fast food players with significant operations in China that may be poised to disappoint investors with their results in the months ahead. The list is ranked from largest operators in the country to the smallest ones.

1. McDonald’s

Number of locations in China (estimated): 2,000

China as a percentage of global store count: 5.7%

Despite efforts to improve its value perception and the introduction of delivery services, McDonald’s has not performed well in China this year. Comparable sales in China for the second quarter fell 3% — the top five cities, which represent about 50% of China’s sales for the company, delivered flat comparable sales for the quarter.

“Lower tier cities are not recovering as quickly as top tier cities, driven primarily by weaker macroeconomic conditions in those outlying areas,” said McDonald’s CEO Steve Easterbrook on the company’s second quarter earnings call in July, adding “we are on track to return to a normalized level of performance in China for the second half of the year.”

But “normalized” performance in China may be something not in the cards for McDonald’s until 2016, based on the dreary commentary shared by Yum! Brands.

2. Burger King

Number of locations in China (estimated): 350

China as a percentage of global store count: 2.7%

China has been a key driver of Burger King’s Asia Pacific segment, which delivered a 2.3% same-restaurant sales increase in the second quarter. In fact, strength in China helped to offset sluggish results in Australia, a component of the company’s Asia Pacific segment. Burger King is a division of Restaurant Brands International.

“In particular, we saw sales growth and unit profitability growth accelerate in China,” boasted Burger King CEO Daniel Schwartz on the chain’s second quarter earnings call in July.

Similar to Yum! Brands, however, slowing demand for fast food in China seemingly out of nowhere could surprise Restaurant Brands’ investors.

3. Papa John’s

Number of locations in China (est.): 232

China as a percentage of global store count: 5%

Papa John’s has struggled to turn a profit in China since it opened its first restaurant there in Shenzen in 2005. The ongoing difficulties, in part due to the high cost of owning about half of its restaurants in the country, led to the closure of 11 locations in 2014.

So far in 2015, the situation hasn’t improved much. “Our China business showed a modest improvement versus the prior year, I think we’re making some progress — it’s still early,” said Papa John’s CFO Lance Tucker on the company’s first quarter earnings call. No additional details on China’s performance were shared on the second quarter call.

Any turnaround for Papa John’s in the country may be pushed out to 2016 in light of the issues highlighted by Yum! Brands.

4. Domino’s Pizza

Number of locations in China (estimated): 60

China as a percentage of global store count: 0.5%

The Chinese becoming more comfortable eating cheese, as well as a growing dairy herd, are two factors why China has been seen as a ripe expansion opportunity for Domino’s. “We are starting to have success there, but it has taken some time,” said Domino’s Pizza CEO Patrick Doyle in an interview withTheStreet in April.

With the Chinese economy slowing, though, opening new restaurants may be put on the back burner. At the 60 restaurants already open in China, generating healthy sales and profits may take longer than execs and investors anticipate.

Written by Brian Sozzi of TheStreet

(Source: TheStreet)

Starbucks Has Plans to Become the Next McDonald’s

© Provided by Business Insider
© Provided by Business Insider

Starbucks wants to be the next McDonald’s.

The coffee chain is constantly introducing improved food offerings, according to a recent report by Deutsche Bank.

The analysts believe that more food offerings will drive sales at Starbucks.

Traditional fast food chains are losing market share to up-and-coming establishments like Chipotle as millennial customers search for healthier options.

This shift in consumer mindsets puts Starbucks in a unique position to take over, according to a recent report by Goldman Sachs.

“Starbucks is virtually the only large incumbent that can offer millennial parents the convenience of a (fast food chain) and food they would not feel guilty/embarrassed to feed to their kids,” Goldman Sachs’ analysts write.

Starbucks has been expanding its menu to include more food options such as sandwiches and salads. It has also added drive-thrus to many locations.

The coffee chain has also been “steadily expanding kid-friendly snack options, such as organic fruit squeezes, organic food snacks, and organic Greek yogurt,” according to Goldman Sachs.

Capturing millennials, defined by Goldman Sachs as anyone aged 15-35, and their children is key because they could become lifelong customers.

“With the continued expansion of the lunch platform and investments in both drive-thru and in-store throughput (Starbucks’) advantages in these areas appear set to expand,” the analysts write.

The fast food giant has more than 36,000 locations around the world. By comparison, Chipotle has 1,700.

McDonald’s is struggling to convince parents that its food is healthy.

Families with a child age 12 or under represent 14.6% of McDonald’s customers today, down from 18.6% in 2011, according to Technomic.

“Kids are more sophisticated,” Mary Chapman, director of product innovation at Technomic, told Crain’s Chicago Business in September. “They’re not just looking for the Golden Arches and the toy.”

In an recent step in that direction, the company pledged to remove antibiotics and hard-to-pronounce ingredients from its chicken.

Written by Ashley Lutz of Business Insider

(Source: Business Insider)