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Can the CBO Revive McDonald’s Sales?

Filed under Advertising, Angus, Global Burgers

It’s all about market share, says McDonald’s CEO Don Thompson, and the chain plans to improve share by emphasizing the “entry level” Dollar Menu, Daily Double and Bacon McDouble burgers while encouraging trade-up to premium-price items such as its new pair of CBO (Cheddar Bacon Onion) Angus and chicken sandwiches.

The new CBO burger was first tested as the English Pub Burger.

Thompson promised that the CBO will be followed by a “stronger new menu product presence in 2013 than we have had in 2012,” an acknowledgement that the chain has introduced few significant menu items in the U.S. this year beyond Spicy Chicken McBites and Blueberry Banana Nut Oatmeal. Contrast that with the pork-patty McIbérica on offer at McDonald’s in Spain, the Serious Lamb Burger in Australia, McNoodles in Austria, the multi-patty McBaguette in France and other overseas menu innovations.

Calling tough, competitive, “uncertain and fragile” conditions “the new normal” for the $900 billion global Informal Eating Out marketplace, Thompson said the market leader is making “tactical adjustments” intended “to better align our actions with this new normal.” That includes “balancing our value messaging with premium menu news”; which in the U.S. means adding higher-profit items like the CBO to counter the impact of budget-menu items. He claimed McDonald’s market share is flat or positive in all markets where it operates.

McDonald's hopes the CBO can boost U.S. sales as the Serious Lamb Burger has done in Australia.

McDonald’s hopes the CBO can boost U.S. sales as the Serious Lamb Burger has done in Australia.

These adjustments come in the wake of McDonald’s release of Q3 results that were below Wall Street estimates. Global comp sales rose just 1.9%, the first gain of less than 2% since 2003’s Q2. The chain’s focus on the Summer Olympics and adding nutrition information to menu boards may have taken McDonald’s eye off the ball of day-to-day sales building. But despite some gripes from franchisees about corporate strategies, Thompson said McDonald’s long-term Plan to Win strategy of optimizing menu, modernizing the customer experience and broadening accessibility through longer hours and new stores remains on track.

An improvement in global economic conditions isn’t expected soon, however. Said Thompson, “We expect near-term top- and bottom-line growth to remain pressured as we focus on driving guest traffic and market share by leveraging our strategies and competitive advantages in response to the global economic, operating and competitive challenges. As we begin fourth quarter, October’s global comparable sales are currently trending negative.”

That puts a lot of pressure on the new CBO sandwiches to succeed. But the CBO burger isn’t new. A third-pound Angus beef patty topped with white Cheddar cheese, grilled caramelized onions, hickory-smoked bacon and creamy mustard sauce, it is the final iteration of what was first tested under the English Pub Burger name (with steak sauce that the CBO lacks) in 2011. Earlier this year it was tried again as the Clubhouse Angus. In Europe, McDonald’s has offered a different, chicken-only CBO (Chicken, Bacon, Onion) sandwich for more than two years.

McDonald’s says it continues to test new technologies such as the payment kiosks it has in France

The new, domestic CBO sandwiches are the first time McDonald’s has offered a premium sandwich as either chicken or Angus beef. Revealing the state of commodity costs, the chicken CBO is priced at $4.79, 30¢ above the $4.49 price of the Angus beef version (although prices may vary by market). Combo meals with fries and a beverage are a $2.10 upcharge.

After the CBO pair run their LTO course, McDonald’s in December will bring back the McRib yet again. Thompson promised a “stronger new menu product presence in 2013 than we have had in 2012” in order to continue the drive for larger share and heavier customer traffic. It’s expected that the previously reported McWraps line of full-size wraps testing in Chicago will be part of the 2013 menu.

Thompson promised a return to “the right mix” in its advertising. He said the chain’s marketing push behind the Dollar Menu was intended to help operator profit margins. However, that advertising “did not resonate” with customers, he admitted. In addition to heavy support for the CBOs, McDonald’s will again advertise McCafé beverages such as frappes.

McDonald’s is testing a number of technological improvements, Thompson said, including kiosks, e-couponing, mobile ordering and cellphone-based customer loyalty programs. However, none of these is ready for a systemwide introduction, he said.

16 Responses to Can the CBO Revive McDonald’s Sales?

  1. Jonathan Wayne

    Had both CBOs this week, they are definitely not going to save McDonald’s.

  2. sam

    I had the Angus CBO: they better hope they have better product than this coming soon. In Los Angeles I paid 4.99 for the burger and combo meal was $7.39. For this price Five Guys blows them away. IN and Out burger in California is also way better and less expensive.

  3. In terms of US sales: not the CBO by itself. I sense a slowing of new product new news which is essential for success. Just noted Jack in the Box had six new products in store via field check last week.

    John A. Gordon
    Pacific Management Consulting Group
    restaurant analysis and advisory

  4. john gage

    Kinda sad, having been a McDonald’s supporter since i could walk and talk, i was totally turned off by the Angus CBO. Absolutely one of the worst sandwiches i’ve ever had. =(((

  5. Deb Cavender

    I could not identify that sauce on the CBO. It was terrible. Hubby and I couldn’t eat it. He had it with the Cheese and I had it without. Both were terrible sandwiches. I will wait for the McRib.

  6. chasehammer

    No thanks, McDonalds doing away with most items on the dollar menu was a horrible idea. Over $2 for large fry. Cmon, for the prices they are charging I can go to a better restaurant than them, sorry.

  7. Mark

    The problem I have with McDonald’s sandwiches in general is how they are assembled. It doesn’t matter if the store is crowded or empty, it’s like they all came out of a clothes dryer. It may seem minor, but annoyances like that keep me away. By the way,
    I enjoyed the CBO; after I reassembled it. sigh…


    I tried the CBO today…it tastes similar to the mushroom and swiss… NOT IMPRESSED for $7.22 its the same burger just different toppings. NOT enthused… mine did have some good peices of bacon though :)

  9. Jon

    I’ll go to Red Robin, have a waitress bring me a delicious burger and bottomless steak fries for about the same money.

  10. Peter

    I am not usually a fast food customer, but I will often pick up a breakfast biscuit or a couple of $1.00 sandwiches to stay on schedule when I am starting a long car trip. I had no idea that prices had risen so much for ,frankly, terrible food. I thought that fast food only retained popularity due to cheap and ready-to-eat features. I think anyone that pays more than $2.00 for the junk most of these places sell is out of their minds…and have ALL their taste in their mouths. :)

  11. Bill

    As a New Yorker, I don’t like the mustardy taste on the CBO burger

  12. squid

    this is really the only thing i will eat at mcdonalds. the cheese is low quality and some people may not like the sauce if you dislike mustard. it’s a combination of mayo and course ground mustard. the onions are sauteed and i think they are vidalia and sweet onions. the bacon is amazing, nice and crisp but maybe too crispy for some people… i like my bacon almost burnt which is how my local mcdonalds cooks it. the price is too high honestly for what it is… i’d much rather go to wendys

  13. So, “Squid,” the CBO is the only thing you’ll eat at McDonald’s…but you’d rather go to Wendy’s? No wonder operators go nuts trying to figure out what consumers want!

  14. Michelle

    The CBO was way too sweet for my taste!

  15. Rhyan

    Had the CBO Chicken (Crispy) for lunch today. It had potential, but the burnt onions killed it. I couldn’t taste anything else. And the price is a little much for the size of the sandwich.

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