How McDonald’s Built a Better Burger

From the beginning, McDonald’s had the fast food recipe. Seventy years ago, its milkshake salesman, Ray Kroc, wanted to see why they had ordered 10 of his multi-mixers. With each one able to make five shakes, a 50-shake capability was astounding. However, he soon saw that they were mass producing cheap burgers. Having arrived before opening time, with some buying a bagful, customers lined up for the 15-cent hamburgers. Always the same, they had mustard, ketchup, and two pickles.

But now, “quick, fast, and safe” no longer works.

McDonald’s Better Burger

Rather like Adam Smith, McDonald’s has always known that a division of labor would expedite production. Then, further boosting efficiency, during the late 1960s, they switched from fresh to frozen meat. Twenty years later, again accelerating, they eliminated hand searing and stopped grilling the onions on top of the burgers. Also, they temporarily stopped toasting the buns (but began again when too many people complained) and installed warming cabinets for the extra burgers.

A Better Burger

At #13 in a recent desirable burger survey, McDonald’s was far behind White Castle and Burger King.

So, knowing change was necessary, and hoping to maintain a Covid sales boom, they are currently implementing some major tweaks. A buttery brioche bun with more randomly spaced sesame seeds replaced the old one. Meanwhile the cheese has to be room temperature so it melts more dependably, and the lettuce and pickles will be cooler. As for the onions, their supplier is providing a rehydratable version that will be sprinkled on a cooking burger. And yes, even the burgers are better. Cooked in smaller batches with a newly calibrated less firm clamshell press, they will be more consistent and juicier. They will also be doused with extra special sauce that could drip from the wrapper.

Our Bottom Line: Monopolistic Competition

Less than a culinary feat, McDonald’s better burger is economic. Thinking at the margin, they had to adjust their land, labor, and capital. Remembering behavioral economics, we see they had a new reference point because fast casual chains like Shake Shack, Smashburger, and Five Guys entered the burger market,

And of course, that takes us to their competitive market structure. Especially because they compete in a monopolistically competitive market, they have to make themselves better. As a market structure with many firms that can easily enter and exit, monopolistic competition means that McDonald’s could not be #13:

Perhaps though, it’s all about the power of the market. No one told McDonald’s to give us a better burger or to respace sesame seeds and drip sauce. But, because of the invisible hand, it decided it had to tweak its fast food recipe.

My sources and more: Today’s facts came from WSJ and my own Econ 101 1/2. (Please note that our featured image is from WSJ.)