McDonald's set to serve delis, diners

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Burger titan McDonald's Corp. is quietly planning the test of two completely new restaurant concepts, one modeled after a diner and another after a deli, Advertising Age has learned.

The chain's lead ad agency, DDB Worldwide, as well as promotional shop Frankel, both Chicago, have been tapped to work on the two concepts. Frankel declined comment; DDB could not be reached for comment at press time. Chicago Restaurateur Richard Melman's Lettuce Entertain You Enterprises has been acting as consultant on the projects.

THE DINER AT McDONALD'S

The diner prototype will be called The Diner at McDonald's or a close derivative, executives close to the project said. Defined as "quick casual," the chain will allow consumers to order from a kiosk and have their selection delivered to their table by a server. The other concept, a yet-to-be-named deli and ice cream shop, is meant to be attached to a conventional McDonald's. Its menu will feature deli sandwiches, artisan breads, soups and fountain desserts.

Both projects originally were expected to open this year but have been delayed, insiders said.

"McDonald's is always looking at innovation for all aspects of our business," a company spokeswoman said, adding, "for obvious competitive reasons, we don't publicly discuss tests, ideas or anything else unless we have something to announce."

"McDonald's is clearly reaching for growth opportunities outside of the core hamburger market and is looking for ways to extend its brand into other arenas of food service," said Allan Hickok, managing director for U.S. Bancorp Piper Jaffray.

A new study by McKinsey & Co. for Food Distributors International asserts that in the next decade, growth in full-service restaurants will outpace that of quick-service, due mostly to aging baby boomers trading up to full-service dining. The study also predicts fast-feeder growth will slow to 1% through 2010, from 2.3% over the past five years.

The architect of the new units is Tom Ryan, McDonald's senior VP-U.S. menu management, new concepts officer. Mr. Ryan didn't return calls. Also said to be working on the project is Rich Biederman, onetime senior VP-concept development at Pizza Hut, who worked there with Mr. Ryan. A McDonald's spokeswoman would not confirm Mr. Biederman's employment, though he does have an active voice mailbox at the company. Mr. Biederman didn't return messages left on that mailbox.

LITTLE SUCCESS IN PAST

McDonald's has experimented with other concepts with little success since the early 1960s, including opening upscale burger joints called Hottinger's and Ramon's; Jane Dobbins Pie Shops (named after Ray Kroc's second wife) in 1968; and Hearth Express in the early 1990s, featuring cholesterol-friendly fare. The chain also has gone outside the U.S. to try new concepts, most notably, McCafe coffee and sandwich shops, now in 15 countries including Australia, Canada, Italy, Japan and Portugal. McDonald's, however, has largely bought its way into, rather than developed, new concepts, including Aroma Cafe, Boston Market, Chipotle Mexican Grill and Donatos Pizza.

John Buchanan, partner and senior VP at Lettuce Entertain You, said the consulting group's client work is confidential. The group, however, counts among its clients Campbell Soup Co., Krispy Kreme and Old Navy. He and Mr. Melman were also the team behind the Popeye's Cajun Kitchen prototype, a standalone quick-casual hybrid for the AFC Enterprises unit.

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