Archives - Business: Page 40
Author: paul carson (Wed Apr 19, 2006 1:04 pm)
Title: business
Salads or No, Cheap Burgers Revive McDonald's
By MELANIE WARNER
Published: April 19, 2006
On a recent afternoon at McDonald's in Union Square in Manhattan, Chris Rivera and Shamell Jackson reviewed the menu, which includes a variety of healthy options, including salad and fruit. Then they each ordered the usual: two McChicken sandwiches from the Dollar Menu, fries and a McFlurry shake.
Darlene Colon, 19, of Brooklyn dined on items from the Dollar Menu at the McDonald's restaurant in Union Square Tuesday.
Mike Mergen for The New York Times
Salads are not among the items on this Dollar Menu at a McDonald's in Philadelphia.
The two 15-year-olds, like many of their classmates at the nearby Washington Irving High School, go to McDonald's often. And it is customers like Mr. Jackson and Ms. Rivera, consistently ordering the cheaper and more fattening items on the menu, who have fueled a remarkable resurgence at McDonald's.
"When I was younger, my mom never used to let me come here," said Mr. Jackson, standing in a register line 15 deep and filled with teenagers. "She thought it was nasty. But I've got my own money now."
The enormous success of the Dollar Menu, where all items cost $1, has helped stimulate 36 consecutive months of sales growth at stores open at least a year. In three years, revenue has increased by 33 percent and its shares have rocketed 170 percent, a remarkable turnaround for a company that only four years ago seemed to be going nowhere.
McDonald's has attracted considerable attention in the last few years for introducing to its menu healthy food items like salads and fruit. Yet its turnaround has come not from greater sales of healthy foods but from selling more fast-food basics, like double cheeseburgers and fried chicken sandwiches, from the Dollar Menu.
While that may have helped many low-income customers save money, there could be a heavy health cost. McDonald's has marketed the Dollar Menu to teenagers, young adults and minorities who are already plagued with an especially high incidence of obesity and related health problems like diabetes.
Many nutritionists say fast food is one of the worst things in the American diet, because of its calories, trans fats, lack of fiber and added sugars and processed carbohydrates. "If you're looking at the Dollar Menu in terms of how much food you get it really appears as a good bargain," said Connie Schneider, a nutrition adviser for Fresno County in California. "But if you're looking at it as how many nutrients are you getting for a dollar, it's the least economical."
McDonald's says it seeks to provide options for its customers, at both low and higher prices. "We're proud of the choices we offer customers," said Bill Lamar, chief marketing officer for McDonald's United States business. "You can come in and order Apple Dippers, salads with low-fat dressing, yogurt, or you can order an Egg McMuffin, which is a very nutritious sandwich. People can make the decisions about how to eat for themselves."
True, McDonald's has persuaded millions of mostly female customers to buy its healthier, higher-priced salads. "We are improving our relevance with products like salads, which cast a favorable glow over our brand and the rest of our menu," boasted McDonald's chief financial officer, Matthew Paul, in a conference call with analysts in July 2004.
In 2005, salad sales totaled 173 million units, about even with salad sales in 2004. Per month, however, sales have slipped from 14.7 million salads in 2003 to 9.6 million in 2006.
And every day, McDonald's moves a lot more double cheeseburgers than either salads or the new Premium Chicken Sandwich — most versions of the sandwich have more calories and more sodium than a double cheeseburger. Richard Adams, a former McDonald's executive who now works as a consultant for franchisees, says the average store sells roughly 50 salads a day and 50 to 60 Premium Chicken Sandwiches, compared with 300 to 400 double cheeseburgers from the Dollar Menu.
Reacting to the success of McDonald's Dollar Menu, Wendy's and Burger King both started promoting their versions of low-priced deals. Wendy's, which in 1989 was the first burger chain to experiment with menu items for $1, lowered prices on its Super Value Menu to 99 cents in January. And in February, Burger King started offering its own version of a dollar menu, including the Whopper Jr. and cheeseburgers.
The Dollar Menu became a permanent part of McDonald's menu in the United States in late 2002. It offers items like a double cheeseburger, the fried McChicken sandwich, French fries, a hot fudge sundae, pies, a side salad, a yogurt parfait and a 16-ounce soda.
Since McDonald's started advertising the Dollar Menu nationally, the double cheeseburger has become the chain's most ordered item. Even priced at $1, double cheeseburgers bring in more revenue than salads or the chicken sandwiches, which cost $3.19 to $4.29.
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