Premium ingredients—including Angus beef, 100-percent-sirloin burgers and steak items—are landing on more quick-service menus as traditional burger chains strive to dissuade customers from defecting to fast-casual competitors.
With such regional chains as Hardee’s, Carl’s Jr. and Back Yard Burgers leading the charge through the proven success of their premium-price Angus burgers, McDonald’s and Burger King seek to close the gap. Angus burgers and sirloin sandwiches are no longer rarities on fast-food menu boards, and café lattes and other espresso-based drinks also are joining upgraded offerings that include gourmet salad mixes and dressings, real ice cream shakes and malts, and other premium products.
Calling the trend “premiumization,” Maria Caranfa, director of Chicago-based Mintel Menu Insights, said the movement is not a fad but a direction that quick-service restaurants are taking in order to remain competitive, particularly against increasingly popular fast-casual players.
Dennis Lombardi, a consultant with Columbus, Ohio-based WD Partner, said, “QSRs are catering to the segment that doesn’t mind spending $3 or $4 for a sandwich but wants premium products with fast service.”
Pricing of the largest premium burgers can run as high as $5.49, or higher for some limited-time offerings with higher-end toppings.
Higher grades of beef may attract the most consumer attention these days, but quick-service chains also are upgrading other ingredients, including sandwich breads and rolls. Ciabatta bread, such as the square-shaped roll Wendy’s debuted last year with its deli sandwich line, was unheard of in the fast-food sector before Jack in the Box pioneered the ciabatta trend. Lavosh- or pita-style flat bread now is featured at Arby’s, where fillings included fajita beef or Philly cheese steak-style beef.
Descended from a Scottish breed introduced to the U.S. market in 1873, Angus cattle yield more than 40 beef grades, including premium USDA Choice cuts that have the most fat marbling.
Carl’s Jr. has continued to upgrade its menu offerings since the CKE Restaurants-owned brand’s first big hit with that strategy in 2001, when it introduced The Original Six Dollar Burger. Both Carl’s Jr. and sister chain Hardee’s have continued to extend their lines of premium, oversized Angus burgers, priced between $2.69 and $5.49 at company-owned units. They also continue to sell standard one-eighth-pound and one-fourth-pound burgers, still popular with many of their core customers.
The two chains’ occasional limited-time offers have featured such premium toppings as porto-bello mushrooms or pastrami, which also bring in premium prices, CKE marketing chief Brad Haley explained.
“As the bar gets raised, we will continue to raise our own standards,” Haley said. Hand-scooped ice cream shakes and malts and a proprietary blend of premium coffee that was introduced in 2003 also are good sellers, he added.
Though he declined to disclose the wholesale costs of the various grades of beef that CKE buys, Haley said the higher menu prices that can be charged for Angus burgers make that offering cost-effective.
If McDonald’s decides to do a chainwide rollout of the Angus Third Pounder burgers it now is testing in some 600 Southern California restaurants, it would vastly expand recognition of Angus beef in the quick-service segment.
McDonald’s test units are selling three variations of the Angus burgers on sesame-seed-topped rolls for $3.99, which is about $1.60 more than a Big Mac.
Burger King debuted its Angus burgers in 2004. Back Yard Burgers, the 179-unit chain based in Memphis, Tenn., has featured 100-percent Angus burgers for many years, said Joseph Weiss, president of Back Yard.
So far, the chains that have added Angus burgers said they have not experienced any supply problems. However, that could change if McDonald’s, with its huge supply demands, enters the picture on a bigger scale.
“So far, so good,” Weiss said. “With McDonald’s testing Angus, it could be interesting to see what happens.”
Commodities expert John Barone, an NRN columnist and president of Market Vision Inc. in Fairfield, N.J., said he would expect wholesale Angus prices to rise temporarily if McDonald’s rolls out the third-pound burgers chainwide. But he said cattlemen could produce more Angus to meet that demand.
Lombardi of WD Partners said, “The next logical step is premium beef beyond burgers.” He cited Denver-based Quiznos Sub, which has a prime rib sandwich, as a leader in this trend.
Some burger chains already have sold steak items, including Jack in the Box, which also is testing a 100-percent-sirloin burger, along with two 100-percent-sirloin steak sandwiches on toasted ciabatta bread. Its Sirloin Steak ’n’ Mushroom Ciabatta sandwich was introduced in February for a suggested $4.69.
Burger King executives have hinted at plans to debut a grilled steak sandwich in the not-too-distant future, but they would not reveal details.
Simultaneously, however, quick-service chains continue to court price-conscious customers with dollar-menu burgers and other value items, a strategy that Lombardi calls “the barbell effect.”
“They are keeping those two segments in balance,” he said.
Consumers on the higher end of the equation have grown more aware of premium products in recent years, compared with the relatively few consumers who asked what kind of beef was in their hamburgers 15 or 20 years ago, Lombardi said.
The quick-service burger segment’s attempts to appeal to higher-income customers appear to be succeeding. Last year marked the first time that consumers with household incomes of more than $75,000 spent more at quick-service restaurants than at full-service restaurants, according to a study by The NPD Group, the Port Washington, N.Y.-based market research firm.
