Restaurants

Fresh beef Quarter Pounders help McDonald's gain market share for the first time in 5 years

Key Points
  • McDonald's says it gained market share for the first time in five years. It credits fresh beef for the increase.
  • The chain started using fresh beef for its Quarter Pounder burger in U.S. stores about 13 months ago.
  • The burger giant said it sold 40 million more Quarter Pounders during the first quarter of 2019 than a year earlier.
McDonalds employee prepares a burger
Remy Gabalda | AFP | Getty Images

Launching fresh beef at McDonald's took more than four years and cost its meat suppliers more then $60 million to pull it off.

But it looks like the risky decision — and logistical hurdles to speed the turnaround from cow to beef patty — is paying off for the fast-food giant.

McDonald's said Monday it gained burger market share in the informal-eating-out category for the first time in five years, thanks in part to its nationwide launch of fresh beef.

The burger giant launched fresh beef for its Quarter Pounders across most of its U.S. stores in May 2018. Fresh beef is not available at McDonald's locations in Hawaii, Alaska or U.S. territories.

The rollout came as fast-food chains fight for customers. McDonald's rival Wendy's has long boasted that its beef patties are never frozen, and it often used that as a way to take a swing at the Chicago-based giant. As struggles to grow traffic persist across the industry, other restaurant companies like Burger King have decided to go in a different direction: plant-based meats.

Part of McDonald's strategy has been to offer better quality food, even though it can add more complexity to the kitchen and the supply chain. McDonald's had to create refrigerators designed to maintain the right temperature and kitchen utensils for handling fresh beef. The company is also transitioning to using 100% cage-free eggs by 2025.

"We're proud that taste and food quality drives sales," Chris Kempczinski, the chain's U.S. president, said in a statement.

McDonald's said it sold 40 million more quarter-pound burgers during the first quarter of 2019 from a year earlier. The chain sold 30% more Quarter Pounders in the first year of the nationwide launch, according to the company.

"I think it's a better product, and I think consumers have noticed," Mark Kalinowski, CEO of Kalinowski Equity Research, said.

Kalinowski said he's watching to see if McDonald's tests fresh beef in its overseas markets or for other burgers — like the Big Mac. In early 2018, several locations in Texas and Oklahoma tested a fresh beef version of the Archburger, an updated version of its unsuccessful 1996 Arch Deluxe.

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