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Instant Analysis: McDonald's Says All-You-Can-Eat Fries Probably Not Coming to a Restaurant Near You

By Leo Sun - Apr 21, 2016 at 12:22PM

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The Golden Arches’ offer of “limitless fries” is actually pretty limited.

A McDonald's (MCD -0.41%) franchisee recently announced that it will open a 6,500-square-foot "McDonald's of the Future" restaurant in St. Joseph, Missouri, in July. The location will feature customizable burgers, sandwiches, and desserts, and digital kiosks for table-side orders. McDonald's previously tested out custom burgers and digital kiosks in several markets, including in the western U.S., Australia, and the U.K. But here's the unique twist -- the location will also offer all-you-can-eat fries as a limited time promotion -- which might boost store traffic and encourage more in-store dining.

Image source: McDonald's.

Could this idea catch on?
To be clear, all-you-can-eat fries is the idea of a single franchisee, and doesn't represent a strategic shift for all McDonald's locations. McDonald's made it clear that the endless fries will be for a limited time only at this one restaurant to promote its opening. McDonald's has generally given franchisees a lot of room to experiment with new ideas. A new 19,000-square-foot location in Orlando, which opened in March, lets guests order pizza and pasta from self-serve kiosks. But just as McDonald's isn't launching pizza and pasta nationwide, it probably also won't offer all-you-can eat fries to promote other locations.

But that's not to say that McDonald's is shy about trying out new ideas. Under CEO Steve Easterbrook, who took over last March, McDonald's added all-day breakfast to its nationwide menus. That move boosted comparable-store sales by 5.7% annually last quarter, and dealt a serious blow to Jack in the Box (JACK 0.13%), one of the few fast-food chains to serve all-day breakfast. Comps at Jack in the Box's namesake stores rose just 1.4% annually last quarter, down from 6.2% growth in the previous quarter.

How much does it matter?
If the St. Joseph location generates a lot of positive buzz and traffic, McDonald's might start testing out all-you-can-eat fries at other locations. But until it does so, the idea won't move the needle for McDonald's stock. For now, McDonald's investors should focus more on the company's broader "future" initiatives -- like tablets and self-serve kiosks -- instead of a headline-grabbing one-shot ideas like limitless fries.


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