A person enjoys a coke and consumes a Big Mac at a McDonald’s in Cologne, Germany, on May 25, 2015. Oliver Berg | picture alliance | Getty Images When the company reports its fourth-quarter results Monday morning, analysts are anticipating U.S. same-store sales growth of just 4.4%, as per StreetAccount estimates. That’s a clear decrease compared with the third quarter’s 8.1% U.S. same-store sales growth. McDonald’s and competing fast-food chains will experience pressure to increase traffic this year. Diners won’t tolerate the steep price increases that drove last year’s sales. Instead, chains have to convince their customers that their food and drinks justify their prices — and more frequent visits. Enter McDonald’s “Best Burger” initiative: small adjustments to the chain’s burgers that result in a noticeably more delectable product. “Our aim was to improve the quality and the flavor and the overall eating experience of our core burgers, but we wanted to stay faithful to the tastes that everyone loves,” McDonald’s U.S. Chief Restaurant Officer Mason Smoot stated at a media event on Monday. McDonald’s didn’t modify the beef patty itself, but rather the cooking and assembly processes. The grills provide the patties a little more space as they cook. For more flavor, only six are cooked at a time, down from eight. Onions are also added before the patties are cooked so they can absorb the patty’s juices. The cooked patties are kept hotter, so the overall burger is still warm when it reaches the customer. The cheese is melted better, the buns are upgraded and Big Macs receive more of their special sauce. “This is a step in the right direction for improving some of their very core products, but staying very true to who they are as well,” stated analyst Mark Kalinowski, CEO of Kalinowski Equity Research. McDonald’s began rolling out the better-tasting burgers about a year ago, but it has finally launched them at all locations nationwide. Some of the company’s most crucial international markets, such as Australia and Canada, have already implemented “Best Burger.” Australia and Canada have outperformed some of McDonald’s other major international markets, which can be attributed at least in part to the burger improvements, Kalinowski stated. At McDonald’s investor day in December, CEO Chris Kempczinski stated “Best Burger” was on track to reach 70 markets by the end of 2023. By the time 2026 finishes, the company anticipates nearly all of its markets to offer the upgraded burgers. “With initiatives like Best Burger, we are making small changes that are adding up to big differences that our customers are really noticing,” he informed investors. McDonald’s is promoting the changes through a familiar character — the Hamburglar, a McDonaldland character used in its ads since the 1970s. In markets with the “Better Burger,” the chain aired a TV commercial where the mascot touted the improved taste of the burgers. McDonald’s own website now features an endorsement from the Hamburglar across the homepage. The changes affect all of McDonald’s burgers except the quarter pounder. The chain already gave that menu staple its own makeover in 2018, when it switched over from frozen to fresh beef for those patties. That change resulted in McDonald’s gaining market share in the burger category for the first time in five years. But Wall Street has mixed opinions on whether the “Best Burger” can drive significant growth. In a research note last month, Wells Fargo analyst Zachary Fadem named “Best Burger” as an “upside driver” for McDonald’s in 2024. However, it’s yet unclear how much of a boost the company expects to see from the initiative. Kalinowski estimates the changes could raise 2024’s overall sales by 0.5%. “I do think the net effect of this will be positive, but it’s somewhat subtle,” Kalinowski said. Others are more doubtful. “I’m skeptical that this increases traffic,” BTIG analyst Peter Saleh stated. “I think this is probably just part of the process of upping your game over time. A lot of these concepts need to improve the quality of their food over time.” But there are some promising early signs that customers are interested in trying the improved burgers for themselves. “Despite receiving no advertising at the local level until just this week, our contacts indicated Better Burger drove a 10% lift on average to burger transactions to date,” Loop Capital analyst Alton Stump wrote in a note to clients in May. Don’t miss these stories from CNBC PRO:
