On March 6th, McDonald’s announced the decision to start using fresh beef in the Quarter Pounder at all locations in the contiguous United States. Whether this move by the world’s largest buyer of beef was in response to competition from ‘higher brow’ fast food chains like Five Guys and Smashburger, social media razzing from rival chain Wendy’s (who already uses fresh beef in all their burgers), or shifting consumer tastes, the news became yet another prominent example of fast food chains increasing their use of fresh ingredients.
As supply chain professionals, we should know better than to take such change for granted. There are a number of complications associated with making such a large shift – many of which will escape the notice of average consumers:
Fresh ingredients have a shorter (and more delicate) shelf life than frozen or highly processed ones. They must go from field or farm to the counter very quickly in order to avoid product loss. At the same time, they can also take longer to handle in the restaurant, a real concern for drive through times. Fortunately for McDonald’s, it is actually a few seconds faster to cook fresh beef, which will help counter the fact that each burger will be cooked to order rather than batch cooked and held under heat lamps until it is served.
McDonalds had to make significant investments in training their teams about food safety – specifically, how to prevent cross contamination now that they will be handling both fresh and frozen beef (which will continue to be used in all other McDonald’s burgers for the time being). As much positive attention and consumer goodwill as the switch to fresh ingredients promises, making a mistake and getting diners sick causes huge and lasting damage. Just ask Chipotle Grill; they have battled both deserved and perceived brand damage from failing to ensure food safety in their restaurants for years.
One of the biggest questions in my mind is whether the fresh beef Quarter Pounder will cost more than one made with processed beef (what can I say, I’m in procurement…). That decision will reportedly be up to each franchise owner. But the cost impact is not limited to the consumer. Participating locations have had to purchase new refrigerators and additional containers so they can store the meat separately. Safety precautions will also require them to reorganize the cooking line to ensure that the raw beef is isolated from other ingredients. These costs have to be borne by the location, and may influence their decision to increase the price of the fresh Quarter Pounder.
As I’ve already noted, McDonalds is the world’s largest buyer of beef. This decision to switch to fresh will have a significant impact, not only on their suppliers, but on the entire supply chain. As first and second tier suppliers make the necessary changes to support this move, it will become possible and affordable for smaller restaurant chains to do the same. But the desire to go fresh does not guarantee that the supply chain is ready or able to support it. Wendy’s learned this first hand when they decided to add blackberries to one of their summer salads. There wasn’t enough supply available to consistently meet the projected demand, and so Wendy’s partnered with growers and waited three years for them to plant new bushes and grow additional product. McDonalds went through a similar process when they wanted to offer a smoothie that included mango. They had to work with a group of suppliers – and a blend of mango varieties – to hit the volume, price point, and consistency needed to meet demand.
Despite the fact that it seems to be part of a larger trend, making the decision to switch from processed to fresh ingredients in the fast food supply chain is not a simple one. There are point of sale considerations, logistical challenges, supplier and safety risks, and additional costs – all of which have to be studied and mitigated.
Fortunately, there are two ways to validate that the effort was worth it. The first is by watching McDonald’s market share and top line performance. The second is to grab a fresh burger and take a bite! Which approach will you choose?
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