Two of the Biggest Things Happening to the Simple Fast Food French Fry

NEW YORK (TheStreet) -- Who knew the ordinary fast food French fry could become so fancy?

That's exactly what's happening, though, as several fast-food companies search for an easy way to serve up better profits this summer. Suddenly, the French fry is being used as a base for crispy bacon and gooey cheese sauce toppings, or something on which to sprinkle artificial powdered flavors.

Last Thursday, Wendy's (WEN) announced it will begin selling "Baconator Fries" fries Monday. The limited-time item will take toppings from its Baconator burger, which has been a hit among millennials in the U.S., and load them on to a plate of french fries. The toppings include cheddar cheese sauce, applewood smoked bacon and shredded cheddar cheese.

Pricing for the messy meal was not disclosed, but it is likely to sell for more than a typical order of large fries at Wendy's, which goes for $2.19.

Struggling McDonald's (MCD), which has notched six straight quarters of sales declines in the U.S., is also getting in on the fancy fry game. According to a report from Burgerbusiness.com, McDonald's is tinkering with its vaunted fry by introducing the ability to customize them to some extent.

Called "Shakin' Flavor Fries," the new item offers a packet of seasonings in three flavors: garlic parmesan, zesty ranch and spicy buffalo. They are available now in Northwest Ohio and Southeast Michigan, and McDonald's says it's viewing them as a local limited time item for now, according to Burgerbusiness.

The jazzed-up fries are in keeping with the mantra of McDonald's CEO Steve Easterbrook as he tries to turn around the Golden Arches: make the company a "modern, progressive burger company." McDonald's fries have a loyal fan base, so why not try and move them forward -- and charge people more for the experience?

McDonald's efforts on seasoned fried resembles a past maneuver by rival Burger King (QSR). For a limited time in 2002, Burger King sold "Shake 'em Up" fries, which gave consumers powdered cheese in packets to be tossed on fries in a bag, and then shaken up. Voilà -- instant cheese fries.

With fast-food companies today emphasizing the use of locally-sourced vegetables and continuing to refine menus to include healthier alternatives, the new desire to market fancier french fries may seem puzzling. But, in fact, it's rather straightforward -- the french fry is often a go-to profit machine.

According to a 2014 study of 300 foodservice operators conducted by frozen potato supplier Lamb-Weston, among operators that added a new fry option to the menu, 83% reported an increase in overall French fry sales of up to 20%.

Further, a sexier-looking french fry had a halo effect over the rest of the fattening menu, something McDonald's could need at present. About 86% of operators in the study said their menu appealed to a broader range of customers if premium fry options were offered in addition standard fare.

Moreover, right now, the price of a potato is dirt cheap. Per data from the St. Louis Fed, the producer price index for Russet potatoes, which McDonald's uses for its fries, has fallen about 54% from its two year high reached in August 2013.

This year alone, the index has dropped 5.8%, perhaps as some restaurants move away from offering the item for healthier alternatives.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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