McDonald’s Selling Steak for Breakfast in Menu Overhaul

September 10, 2013 Leave a comment

McDonald’s Selling Steak for Breakfast in Menu Overhaul

Breakfast just got meatier at the Golden Arches. McDonald’s Corp. (MCD) is introducing a new “thick, juicy steak” for the morning crowd, Lisa McComb, a spokeswoman for the Oak Brook, Illinois-based company, said in an e-mail. Customers can get steak on any breakfast sandwich and the new morning fare will be featured in advertisements, she said. The fast-food chain began introducing the steak across the U.S. last month and is continuing to roll it out now, she said. It will be sold in about 9,600 of the chain’s more than 14,100 domestic locations, she said. A steak, egg and cheese biscuit with grilled onions has 540 calories — 10 less than a Big Mac – – while a steak patty on an English muffin packs 430 calories.

McDonald’s has been overhauling its menu this year in an effort to attract American diners, who are cash-strapped and also seeing more new items from Wendy’s Co. and Burger King Worldwide Inc. (BKW) McDonald’s has recently introduced a 250-calorie egg-white sandwich, chicken McWraps and this month is rolling out chicken wings in the U.S. It’s also testing a different Dollar Menu with items priced as much as $5.

“Consumers want new and interesting and different,” Bryan Elliott, an Atlanta-based analyst at Raymond James Financial Inc., said in an interview. The steak sandwiches are part of McDonald’s strategy to have both high-priced items and also value fare, he said.

The steak sandwiches will probably be a “premium product at a premium price, so it’s meant to continue to work on that barbell pricing strategy,” he said. “Steak is one of the most expensive proteins out there.”

Trailed Estimates

McDonald’s earnings have trailed analysts’ estimates in the past two quarters. The company is scheduled to report August same-store sales tomorrow. U.S. sales at stores open at least 13 months rose 1.6 percent in July after falling in June.

The world’s largest restaurant chain rose 0.2 percent to $96.45 at the close in New York. McDonald’s has gained 9.3 percent this year, trailing a 16 percent increase for the Standard & Poor’s 500 Restaurants Index.

Selling steak in the morning hours may put McDonald’s in competition with some fast-casual dining chains, including Panera Bread Co. (PNRA), that sell steak for breakfast. Panera sells a 630-calorie steak and egg breakfast sandwich with white cheddar cheese on a bagel. Cosi Inc. (COSI) sells a breakfast wrap with steak, eggs, pesto and provolone that has 508 calories.

Wendy’s, based in Dublin, Ohio, last year backed off testing breakfast foods after it wasn’t satisfied with its financial performance. Miami-based Burger King doesn’t sell steak for breakfast, according to its website.

There are about 34,700 McDonald’s restaurants worldwide, of which about 81 percent are franchised.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

Filed under Macro Trends

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