12 McDonald's Menu Items That Failed Spectacularly
by Kim Bhasin
Wednesday, August 31, 2011
New product development always has a level of risk attached to it, and for fast food companies like McDonald's (NYSE: MCD - News), the pace of the business requires the constant creation of new menu items.
McDonald's has hundreds of different products that are offered in locations worldwide, but for every tremendously successful one like the iconic Big Mac, there's a spectacular failure.
Why? Ineffective marketing, bad product launches and consumer reluctance for change are common. But when you're dealing with food, there's always the simplest of reasons: people just don't like the taste.
We've compiled 12 of the biggest failures McDonald's has ever had. Some fizzled into obscurity, while others vanished completely.
*McLobster
The McLobster is pretty much lobster meat shoved in a hot dog bun with "McLobster sauce" and shredded lettuce. Like its much more successful compatriot the McRib, it appears every once in a while across the country as a promotion, only to vanish weeks later.
The fabled McLobster drew some hype earlier this year when rumors swirled about its reappearance nationwide. It's currently only available in parts of New England and eastern Canada.
There are a couple factors that gutted the McLobster's hopes of making it to the big time. It costs a hefty $5.99, which consumers are reluctant to pay for a single sandwich. Plus, it's incredibly difficult to market a "quality" shellfish item at a fast food joint.
*McGratin Croquette
The McGratin Croquette (known as Gurakoro in Japan) was a particularly strange item, specially created for the Japanese market. It contains deep fried macaroni, shrimp and mashed potatoes. 8tokyo.com describes the texture of the inside of the croquette as "fluffy and creamy."
Most attribute its failure to its taste, but the marketing of the McGratin Croquette didn't match up well with the Japanese audience either. Somehow, it still manages to make a surprise appearance every so often in Japan only.
*Hula Burger
McDonald's founder Ray Croc had countless successes with his items, but this wasn't one of them.
The meatless Hula Burger was meant for Catholics who abstained from eating meat every Friday. Instead of a beef or chicken patty, its bun contained a grilled pineapple slice, topped with cheese.
The idea behind it made sense — the execution just didn't work. People simply didn't like it. McDonald's killed the Hula Burger early on, as it became quickly evident that its alternative, the Filet-o-Fish, was getting much better traction.
*Pizza & McPizza
McDonald's developed new pizza items in the late 1980s in its push to start offering dinner items, but it had some inherent problems right from the get-go.
The made-to-order pizza took far longer to make than the usual McDonald's fare, and consumers just weren't willing to wait for food that was supposed to be fast. There was also the McPizza, which resembled Hot Pockets and failed miserably.
Competition in the pizza industry was intense, and McDonald's pizzas didn't have the pull to take customers away from the big chains like Domino's and Pizza Hut. But also, it just wasn't consistent with the McDonald's brand. People went to McDonald's for burgers and fries, not pizza.
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Another one of those dinner items, McSpaghetti just couldn't get it quite right. There was also lasagna and fettucini alfredo, along with side dishes in the form of mashed potatoes with gravy and a vegetable medley. It went down quickly with the rest of that dinner menu.
It's still available in some international markets, and even has a bit of a cult following.
*McAfrika
The McAfrika was one of the biggest marketing catastrophes McDonald's ever caused for itself. It contained beef, cheese, tomatoes and salad in a pita-like sandwich.
It was released in 2002 during a slew of famines in southern Africa. McDonald's apologized and pulled the item, once the PR crisis heated up.
McDonald's did it again with the McAfrica in a 2008 promotion for the Olympics. Unsurprisingly, it received a similar negative outcry.
*Arch Deluxe
The Arch Deluxe debuted in 1996 and was meant to target (and only target) McDonald's adult customers, but it bombed massively. The burger was a quarter-pounder with peppered bacon, lettuce, tomato, cheese, onions, ketchup and a secret sauce.
It's been considered one of the most expensive product failures in McDonald's history, primarily due to the $100 million marketing campaign that accompanied it. Advertisements depicted children disgusted with the burger, and Ronald McDonald playing adult sports.
A decade later, McDonald's tried a similar sandwich in Japan, called the Tomato McGrand. It failed too.
*McHotDog
The taste of the McHotDog was acceptable to consumers, and there were no scandals behind the scenes or within the bun.
But the failure McHotDog was a branding issue. Even what seemed like a low-risk, simple product never caught on because McDonald's consumers just didn't equate the brand with the type of food. It made a few comebacks during the mid-1990s as a seasonal item in select mid-western US restaurants.
It has since reappeared in Japan, where consumers are used to McDonald's offering a wider variety of options.
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McDonald's introduced the McDLT in the mid-1980s. It was a simple burger with lettuce and tomato, but came in a styrofoam package with separated the lettuce and tomato from the beef patty, keeping the veggies cool and the meat warm.
All was going well for the McDLT until a PR crisis squashed it. The country was becoming increasingly conscious about the environment, and the double-container caused double the damage.
McDonald's pulled the ill-fated McDLT from its menu in 1990, after a 6-year run.
*McLean Deluxe
The McLean Deluxe was another one of McDonald's earlier efforts to be perceived as more health-conscious. It was more a cousin to its predecessor the McDLT than the similarly-named Arch Deluxe which appeared half a decade later.
Introduced in 1991, the burger was advertised as 91% fat-free, but what doomed the McLean Deluxe was what McDonald's did to get it that way.
McDonald's replaced much of the fat with water and injected carrageenan (seaweed) in order to get the patty to stay together. It performed well in initial taste tests, but it didn't sell well once it went live.
*Big N' Tasty
The Big N' Tasty was yet another attempt to defeat Burger King's Whopper, a feat its predecessors — the McDLT and Big Xtra — failed to do.
While not a complete failure, consumer preferences had leaned towards another line of McDonald's items in recent years — the Angus burgers — and the company decided to cut the Big N' Tasty from its menu earlier this year.
*Super-size
McDonald's started offering super-sized meals in 1993, and fast-food-goers gobbled it up. But it all went downhill in 2004 when independent filmmaker Morgan Spurlock's documentary Super Size Me was released. The film showed Spurlock eating nothing but McDonald's for a month, and how it negatively affected his body.
It was a PR disaster for McDonald's, and the company had no choice but to start pulling super-sizing from its menus. By the end of 2004, super-sized portions were gone forever.
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ギャンブルの株式投資はラスベガスより勝ち率が高い。
Keryx: Quick Profits On A Partial Rebound
April 6, 2012 by: Ry Frank | about: KERX, includes: AEZS, AMGN, BAX, HGT, TEVA
In early April, Keryx (KERX) announced that the Phase III trial for perifosine, a colorectal cancer drug, has not reached its goal of improving the chances of survival when compared with a placebo. The trial was conducted for multiple myeloma (a type of cancer affecting plasma cells), and demonstrated that a combination of Keryx's drug perifosine and chemotherapy did not stem the survival in patients with refractory advanced colorectal cancer in comparison with a placebo combined with chemotherapy. Keryx stock immediately lost around two thirds of its value and many analysts cut the target price by half, while downgrading recommendations to neutral. Perifosine is licensed by Keryx for the U.S., Canada and Mexico from the Canadian biotech company Aeterna Zentaris (AEZS), which also lost about 67% on the Toronto Stock Exchange.
I consider it is extremely unlikely that Keryx will spend more time and money on pursuing any further studies and, to all intents and purposes, perifosine has to be taken out of any investment and valuation equation. With 20/20 hindsight, it is clear that the market has been unduly optimistic about the approval for the trials and I consider that the stock had been bid up to unrealistic price levels and the inevitable correction had to take place. The question now is, where does Keryx go from here, and is it worth holding on to the investment at the sharply reduced valuation? In passing, I should note that perifosine should not be completely written off because it has possible applications in the treatment of multiple myeloma though, as I said, I consider it unrealistic to expect the company to persist with the study. The company has itself said that because of the failure, recruitment for the multiple myeloma study will be difficult.
In fact, biotech companies like Keryx present dual opportunities for investors. Naturally, the success of the perifosine trials would have provided investors with large potential rewards, but the failure provides an opportunity for further investment, specifically for investors who are still bullish about the company. I consider that the company is unlikely to fold up, because it still has $31 million in cash to pursue its other projects. However, as a measure of prudence, I would expect the company to raise more capital to bolster its cash position.
Keryx is only a two product company and both products are still in the pipeline. The other drug, Zerenex (ferric citrate) is intended for patients who are suffering from renal disease in the final stages.
Hyperphosphatemia is the condition in renal failure where patients cannot excrete phosphorous and the resulting buildup of phosphorus in the blood results in bone disease and tissue calcification in organs such as the heart and lungs. Late second stage trials are being conducted and the results are expected by the end of the year. Keryx is expected to apply for marketing approval in the United States in the first quarter of 2013 while its Japanese partners Japan Tobacco and Torii Pharmaceutical apply for approval in Japan at the same time. The drug is an oral medication that is based on iron and has the capability of transforming phosphorous into products that are not absorbed by the blood.
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The target market for Zerenex is believed to be in the region of around $750 million in the United States and $1.5 billion globally. Obviously, this is much smaller than the potential market for perifosine could have been but I would regard Zerenex as a lower risk business opportunity. Zerenex now has to form the basis for any platform on which to value Keryx and the reduction in potential returns means that earlier valuations have necessarily to be revised sharply downwards. Keryx has now become a bet on a single pipeline product company with no assurances that trials will be successful or that necessary regulatory approvals will be forthcoming. At the current stock price, I believe that this stock is undervalued, and I would hold an existing investment in the expectation of a partial rebound.
Despite the slump in stock price, the impact of the failure of the trials on AEterna will be less significant. AEterna continues to have $46 million in the bank that is available for other projects. It has other anti-cancer drugs under development particularly AEZS 108 for ovarian and prostate cancer. AEterna has announced that it will consult its partners (which presumably include Keryx) before deciding on its future steps.
Pharmaceutical companies that compete with Keryx include large and well funded players with plenty of financial resources and multiple drugs being developed in the pipeline. For example, Baxter International (BAX) has a market capitalization well in excess of $30 billion and is an industry leader. Baxter is in the development of anti-cancer drugs as well as drugs to treat kidney diseases. I considered extremely unlikely that the travails of Keryx will have any impact on the Baxter stock price. Another major biotech company Teva (TEVA) has a market cap of close to $40 billion. The market leader in generic drugs, it may have profited from a genetic version of perifosine but the failure is not going to have an impact on the share price. The 800 pound gorilla of the biotech industry, Amgen (AMGN), competes more directly with Keryx for both anti-cancer and kidney drugs but it is far too large and successful to feel any ripples from the Keryx problem.
Another interesting company to look at is Shire Plc (SHPGY). The company provides drugs in the areas of human genetic therapies (HGT), gastrointestinal (GI) diseases, and therapies for attention deficit hyperactivity disorders (ADHD), as well as infectious diseases such as HIV and Hepatitis B. A positive outcome of the Keryx trials would have had a positive effect on the stock price, but I expect it to remain largely untouched by the failure. Shire has a market cap of approximately $19 billion, and it is far too financially sound and diversified in terms of product. Its investors are unlikely to be worried by the Keryx debacle.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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