April 29, 2015 / 5:19 PM / 3 years ago

UPDATE 1-McDonald's tests custom burger program with drive-thru option

(New throughout, adds details and McDonald’s comment)

By Lisa Baertlein

LOS ANGELES, April 29 (Reuters) - McDonald’s Corp, working to revive U.S. sales amid fierce competition, is testing “TasteCrafted,” a more modest version of its custom sandwich program that will cost franchisees less to install and can be offered through drive-thru windows.

Word of the test, which appears to be a simplified version of McDonald’s “Create Your Taste” customization project, lands just before new Chief Executive Steve Easterbrook is scheduled to unveil his corporate turnaround plan on May 4.

McDonald’s U.S. restaurant sales have declined for six straight quarters, hobbled by tough competition from more nimble chains such as Wendy’s Co, Chick-fil-A and Chipotle Mexican Grill Inc. But McDonald’s own missteps in its top profit market also have led to large and complicated menus that have slowed down service.

McDonald’s is trying TasteCrafted in a limited number of restaurants near Atlanta, Portland, Oregon, and Southern California, spokeswoman Lisa McComb said. She declined to give a count of restaurants in the test.

As many as 30 McDonald’s restaurants in Central California towns such as Santa Barbara and San Luis Obispo are offering TasteCrafted, which allows diners to choose burgers, sandwiches, McWraps and salads in a variety of “chef inspired flavors,” Janney Capital Markets analyst Mark Kalinowski said in a client note.

As many as seven more restaurants in Oregon are running the test, said Kalinowski, who did not immediately respond to requests for comment.

“The franchisee investment is small.... From what I know, this could be rolled out nationally in a few months, whereas Create Your Taste would take (two to three) years,” one industry source said in Kalinowski’s note.

The TasteCrafted program offers sandwiches made with beef or chicken, three choices of buns and four different topping flavors: bacon clubhouse, pico guacamole, hot jalapeno and ranch deluxe. The flavor choices for McWraps and salads are southwest and cucumber ranch.

Franchisees have been pushing back against Create Your Taste, a custom sandwich program introduced by McDonald’s previous CEO. Create Your Taste is being tested in a small number of restaurants in California, Illinois, Wisconsin, Georgia, Missouri and Pennsylvania, McComb said.

U.S. franchisees have complained that Create Your Taste will exacerbate already slow service. They also say that the installation price of more than $100,000 per restaurant is not justified, in part because the custom sandwiches are not offered through the drive-thrus that account for more than 60 percent of U.S. restaurant sales. (Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio)

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