McDonald’s today introduced a new premium-price burger at its restaurants in Ontario, Canada, and in so doing redefined quick-service restaurants’ definition of “premium.”
The new Smokehouse Deluxe burger tops the $5 price ceiling above which QSRs previously have feared to venture. Pricing varies but a check of outlets around Ontario found the sandwich à la carte priced from $5.19 (Canadian or $5.05 U.S.) to as much as $5.98 ($5.82 U.S.) in one Toronto McDonald’s, where the combo meal with tax is a whopping $7.90 ($7.69 U.S.). By comparison, McDonald’s Angus Third Pounder combo meal here is about $5.79, and $3.99 for the sandwich alone.
That pricing puts the Smokehouse Deluxe—a quarter-pound beef patty topped with crispy onions, barbecue sauce, bacon, lettuce and mayo—close to the “Six Dollar Burger” that Carl’s Jr. mocks as inflated casual-dining price for burgers. Carl’s Jr. only went as high as $4.49 for the “Six Dollar Burger” version of the Grilled Cheese Bacon Burger it promoted in January.
Fast-casual chains have shown that consumers will pay more than $5 for a quality burger. At Smashburger, for example, burgers begin at $4.99 and range up to $6.99.
As with some Burger Kings’ decision to charge as much as $8.99 for 8-piece BK Fire-Grilled Ribs combo meals this spring, McDonald’s may be exploring pricing opportunities resulting from casual-dining chains’ retreat from discounting. Eager to keep customers from trading down to QSRs, casual dining offered more deals a year ago. That hurt margins, and casual dining has now moved marketing focus away from deep discounts. Ruby Tuesday’s own Smokehouse Burger (topped with aged New York Cheddar, applewood-smoked bacon, barbecue sauce, and onion straws) is priced at $9.49. Applebee’s Steakhouse Burger with A.1. Steak Sauce also is $9.49. That tier leaves a lot of burger-pricing room between $5 and $9 for QSRs and fast-casual chains to explore.
The Smokehouse Deluxe is available only in Ontario at present, and Canada doesn’t always export its menu items to U.S. McDonald’s menus. The$1.99 McMini chicken/baguette sandwich introduced in Canada in March hasn’t moved south yet, for example. But the Mac Snack Wrap did well enough in Canada that it was imported here last year, spawning the $1.99 Angus Snack Wrap that will be available nationally this week.
Meanwhile, in Western Canada, McDonald’s is selling a bacon-topped Quarter Pounder Deluxe. Details on pricing were not immediately available, but a reader says it is priced at $4.99 before tax.