For McDonald's, Will Fewer Items On The Menu Boost Profits?

In retail, the greater the number of SKUs, the better. It gives customers more choice and reasons for more customers to come in the door. But when the retailer is a service business—such as a QSR—that ROI equation gets a lot more complicated. Cut now to America's favorite burger joint. McDonald's (NYSE:MCD) menu has grown almost as much as the waistline of its most loyal diners. Since 2007, it's increased about 70 percent, and it now stands at an impressive 145 menu items, according to a report from Bloomberg. And that's slowing down the kitchen, which has to master how to manufacture—and stock the ingredients for—every one of those items.

BusinessWeek adds that the actual number of different menu items is a smaller figure, given how similar many of the offerings are: "Take the Double Cheeseburger, which has two beef patties and two slices of American cheese, and the McDouble, which is the same thing with one slice of American cheese. Or the Premium Crispy Chicken Club Sandwich, served with mayo, and the Premium Crispy Chicken Ranch BLT Sandwich, essentially the same sandwich but with ranch sauce instead."

McDonald's reaction to its 145-menu item is to slash it. The Angus burger has already been killed, along with Chicken Selects and Fruit&Walnut salads. (Note: Those salads were a strange relatively healthy item on the menu, so its days were always numbered. Low-fat yogurt, slices of green and red apple, grapes and walnuts. The walnuts were sugared, but aside from that, it was a wonderful fast-food option for kids. Oh well.)

Reported to also be on the imminent chopping block, according to a franchisee e-mail reviewed by Bloomberg: Caesar salads, the McSkillet Burrito, the Southern Style Biscuit and steak bagels.

"It's gotten to the point where the operation has kind of broken down and that's all a symptom of the complication of the menu," said Richard Adams, a San Diego-based restaurant franchisee consultant and former McDonald's store owner. "They can't make the food fast enough."

Cutting the menu down to size is a challenge for McDonald's in part because U.S. fast-food chains are engaged in an arms race as they compete to attract diners, the Bloomberg story said. Even as McDonald's cuts items, it keeps adding new ones, including egg- white McMuffin sandwiches, three varieties of chicken McWraps and three new Quarter Pounders. Burger King Worldwide Inc. (NYSE:BKW) in March started selling turkey and veggie burgers, while Wendy's Co. rolled out flatbread grilled-chicken sandwiches.

For more:

- See Bloomberg story
- See Bloomberg video
- See BusinessWeek story

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