On Nov. 9, the day after the surprising U.S. elections, Twitter user Aaron Veikley opined, "I ate a Sriracha Big Mac today and totally forgot who became our president."
This new food item being tested in Columbus, Ohio, area McDonald's (MCD) locations is poised not only to induce temporary amnesia, but to help the company grab the attention of millennial diners. Amidst concerns about a potential restaurant recession," extra profits for the fast-food chain would be a boon.
If you live within a 100-mile proximity of any hipsters, you are probably well acquainted with sriracha. It's a variety of hot sauce made from chili pepper paste and distilled vinegar. Although the origins of the spicy condiment are disputed, Huy Fong Foods, a California-based brand founded by a Vietnamese immigrant, made the sauce more popular in the U.S.
McDonald's isn't the first fast-food outlet to harness the spicy foodie-magnet potential of sriracha. Yum! Brands' Taco Bell, Restaurant Brands' Burger King, and Jack in the Box, among others, have recently dabbled with sriracha-laced recipes.
But McDonald's newest menu tweak is the latest for the classic fast-food company as it attempts to change its stodgy image.
Only a decade ago, McDonald's would never have made a list of places where "foodies" deigned to eat. However, new CEO Steve Easterbrook has correctly realized that McDonald's needs to change with the times.
First, the company's business was threatened by the rise of the fast-casual segment. Led by Chipotle Mexican Grill, which McDonald's would purchase before spinning off again, and Panera Bread, fast casual presents higher-quality ingredients but with the efficiency of fast food.
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Since Easterbrook took the reins in 2015, McDonald's has made efforts to improve its menu to compete with these upstarts. Investors have been pleased, although somewhat reserved about the stock.
But now the entire restaurant industry faces headwinds from a potential restaurant recession that may already be upon us. And McDonald's has been no exception, posting underwhelming quarterly results.
However, McDonald's has proven itself recession-proof before. And the company will continue to do so. By adjusting its menu to suit ever-changing customer preferences, McDonald's is already putting itself in a good position.
Along with flirting with gourmet burgers to compete against pricier, popular burger joints like Shake Shack, McDonald's is testing regional specialties to please the "locavores," as well as appealing to more health-conscious eaters by eliminating high fructose corn syrup and margarine in certain products.
The company has also managed to woo customers with its all-day breakfast menu, which it is currently expanding, and its Happy Meal breakfast for kids.
McDonald's is a savvy company and a legacy investment for the long term. Continue to hold this stock.
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