CHICAGO (AdAge.com) – Don't get Andy Puzder started on McDonald's Angus burger. The Hardee's and Carl's Jr. chief said his chains' Black Angus "Six-Dollar Burgers" cost the consumer roughly the same as the Golden Arches' new burger but offer better value and taste.
"We're perceived as being better quality, which is right," Mr. Puzder said. "But we're also perceived as being more expensive, which is wrong." He acknowledges that this perception wasn't a problem a few years ago. "It's relevant now," he said.
Mr. Puzder and his media team visited Ad Age's Chicago bureau as part of his "McAngus Smack" media tour, taking Hardee's and Carl's Jr. burgers to locally based media who can't buy his products close to home. The chain's 3,100 locations are concentrated in the West, South and Southeast.
The brands, which aim to steal business from casual-dining restaurants such as Applebee's and Chili's, have suffered during the downturn. Same-store sales fell a combined 3.6% in the most recent quarter, which is a sequential improvement over the previous quarter, when they fell 4.6%. By contrast, U.S. same-store sales at McDonald's grew 2.6% in July.
Mr. Puzder, who runs Hardee's and Carl's Jr. parent CKE Restaurants, maintains that his margins have remained intact by not discounting. He has publicly castigated the value-menu craze for years, promising that his brands will never support such platforms, because he claims they denigrate the product, not to mention operating margins. He recently cited slipping margins at Wendy's and Burger King as evidence of this. It seems only McDonald's has been able to peddle value and come out ahead -- the chain still has the best sales and the best margins in the industry.
Opportunity to pounce
But when McDonald's teed up the national advertising for Angus last month, Mr. Puzder saw the opportunity to pounce. "They're perceived as the value leaders, but their comparable burgers cost more," he said. "We make a bigger burger, a better burger, and it costs less."
Hardee's "Six-Dollar Thickburger," which has patty that's one-third of a pound, sells for $3.39. The Carl's Jr. version, which is half a pound, costs $3.99. Both of the "Six-Dollar" as well as McDonald's Angus burgers have lettuce, tomato, cheese, mayo, red onion and salt-and-peppered beef.
But how do they stack up? In a Tuesday afternoon taste test of the Carl's Jr. burger, Ad Age reporter Jeremy Mullman proclaimed the "Six-Dollar Burger" was "better than Burger King or McDonald's, but not as good as an In-N-Out." He praised the patty's seasoning and crust, adding, "It tastes like it was cooked over a flame." DataCenter Research Editor Maureen Morrison agreed but complained that a burger should have dill, rather than sweet pickles. (In a subsequent e-mail, Mr. Puzder added that consumers can choose dill, sweet or no pickles on their burgers.)
But this isn't just a bunch of lunches with hungry reporters. Both chains are running ads from agency Mendelsohn/Zien, Los Angeles, comparing their "Six-Dollar Burgers" to McDonald's Angus burger. Carl's Jr. has also created its own version of a Big Mac with twice the meat for $2.49, less than Big Mac in markets where the chains compete.
"It does have less bread," Mr. Puzder conceded.