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McDonald's announces big push onto Wendy's turf with fresh beef burgers

Last updated: 12:19 06 Mar 2018 EST, First published: 07:19 06 Mar 2018 EST

McDonald's golden arches
The fast-food giant is on track to roll out fresh beef Quarter Pounder and Signature Crafted Recipe burgers across the contiguous US by early spring

McDonald’s Corp. (NYSE:MCD) is fighting back against taunts by Wendy's Co. (NASDAQ:WEN) about its use of frozen beef with the announcement that it's using fresh beef in its Quarter Pounder and Signature Crafted Recipe burgers in about 3,500 restaurants and is on track to roll out by early spring the use of fresh beef in those sandwiches across the contiguous US.

"The switch to fresh beef quarter-pound burgers is the most significant change to our system and restaurant operations since All Day Breakfast," McDonald’s USA President Chris Kempczinski said.

"Over the past two years, we have been listening to our customers and evolving our business to build a better McDonald’s," Kempczinski said. "We are proud to bring our customers a hotter and juicier quarter-pound burger at the speed and convenience they expect from us.”

McDonald's said the 100% fresh beef quarter-pound burgers are now available in about 3,500 restaurants in markets that include Atlanta, Charlotte, Memphis, Miami, Nashville, Orlando, Raleigh and Salt Lake City. The company over the next month will transition to fresh beef quarter-pound burgers in additional markets that will include Denver, Houston, Los Angeles, San Francisco and Seattle, with a full rollout to participating restaurants by early May.

In test markets in Dallas and Tulsa, Oklahoma, McDonald's said it saw a 90% satisfaction rate from customers who order the fresh beef burgers and that 90% intend to repurchase them.

Credit Suisse pulls switcheroo and cuts price target

McDonald's push into fresh beef did not stop Credit Suisse from slashing its price target on McDonald's shares only a day after affirming that price target.

CNBC reported that while Credit Suisse reiterated its outperform rating on the stock, it lowered McDonald's price target to US$175 a share from US$191. Credit Suisse said it reduced the price target after talking to some McDonald's franchisees and discovering that sales have slowed so far this year.

As for McDonald's, the company plans next month to introduce another premium sandwich – Garlic White Cheddar. McDonald's said the Signature Crafted Recipe sandwich will feature either a fresh beef, quarter-pound burger or a chicken breast and will be available at participating U.S. restaurants.

Shares of McDonald's were down 0.05% to US$150.28 in midday trading.

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