McDonald's Has Big Plans for the Big Mac

By Markets Fool.com

Image source: McDonald's.

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If you think the Big Mac burger atMcDonald's (NYSE: MCD)is too much or just not enough, the world's largest burger chain is about to roll out new options. McDonald's will introduce Mac Jr. and Grand Mac at restaurants in Florida and Pittsburgh later this month. They are slated to go nationwide by early next year.

Mac Jr. takes out a layer of the original Big Mac, eliminating one of the two hamburger beef patties and the bread slice in the middle. It's essentially a dolled up version of its cheeseburger, only dressed up with shredded lettuce, minced onions, pickles, and the signature Big Mac sauce served on a sesame seed bun. Grand Mac doesn't add a third layer, as you might initially expect. It just uses larger beef patties, and naturally goes with a larger sesame seed bun.

It's all of the same ingredients in the three options. Customers just need to size up how much Mac they are actually craving.

Some of the market's initial reactions aren't very flattering.

"McDonald's Should Be Embarrassed by the Biggest Changes Ever to the Iconic Big Mac," readsFriday's headlineout of TheStreet.com's Brian Sozzi.

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I don't agree. It's not enough, sure, but it's certainly better than standing still. The Big Mac is no longer relevant. A memo sent by a top franchisee this summer that was intercepted by The Wall Street Journal claimed that just one of every five millennials has ever had a Big Mac. We live in a world of growing burger choices, and if this little novelty gets younger consumers to finally try a unique sandwich it could go a long way in getting millennials to embrace the Golden Arches.

Life after breakfast

McDonald's seemed to be turning things around last year after a couple of rough years of sluggish stateside comps. It has gone on to rattle off five consecutive quarters of positive comps, but that growth slowed to just 1.5% in its latest quarter.

A big contributor to the chain's rebound was last fall's decision to offer select breakfast items all day. That menu was recently expanded, but comparisons will obviously get more challenging now that we'll be comparing results on an apples to apples -- or McMuffins to McMuffins -- basis.

The stock has been vulnerable despite the rebound. It has shed more than 5% of its value year to date. It actually held up better as an investment when its comps were going the wrong way. The market's fretting the chain's future. The stock's now juicy yield of 3.4% -- and income-chasing pedigree after boosting its payout for the past 39 years -- will keep investors close. However, McDonald's needs to do something to keep diners coming back beyond all-day breakfast. Shaking up the sizes for its flagship Big Mac sandwich -- even if it's for a limited time -- could be the special sauce that Mickey D's needs.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.