Baking Up Value

Let’s keep the product development and value theme going for another post and consider a new development in one of America’s most over-developed consumer products: the common hamburger. If you’ve been watching the news over the past few years – and I hope you are; it would be sad if the only place you get your news is from me – you’ve probably seen stories about the various crimes against nutrition and occasionally sanity perpetrated in the guise of specialty hamburgers. There’s a 5,000-calorie chili cheeseburger called the Landfill Burger from Max & Erma’s; various “challenge” burgers ranging from two or three pounds up to the 123-pound “Main Event” offered by various pubs; even the 9-patty tower of madness called the T-Rex Burger offered at selected locations by Wendy’s. But until now there have been very few examples that offered additional value for the customer without costing the company extra in terms of materials, labor, reputation or the occasional product liability lawsuit…

A story off the NBC News site brings us word of a new product being tested by Wendy’s for possibly deployment later this summer: an upscale burger with a pretzel-style bun. The company has been introducing a number of new products as they attempt to maintain parity with McDonald’s and Burger King in rolling out new food items, and it appears that Wendy’s is trying to position itself as slightly more upscale than the competition, much the way Target did in its three-cornered fight with Wal-Mart and K-Mart. Pretzel-style breads and rolls have been gaining popularity in several markets over the past few years, and if Wendy’s can get this product to market before the competition duplicates it they should be able to market the sandwich as an “upgrade” over more common burgers, and therefore worth paying a premium to obtain. What makes this concept so brilliant is that the value created for the customer isn’t going to cost the company much of anything…

Pretzel-style buns are somewhat more complex to produce than conventional bread rolls, but not that much more complex or expensive. Certainly not compared to the costs associated with adding extra cheeses, sauces, or worst of all additional meats to the sandwich as most previous “premium” burger products have done. But this addition will produce a tangible change in both the appearance and taste of the final product – an improvement, in fact, to anyone who likes pretzels – at very minimal cost to create and effectively no additional cost to deploy (the new buns can be produced at the same bakery, shipped in the same trucks, heated in the same warmers, and so on). All they need now is an effective ad campaign, and they should be off to the races…

Even if this does work it’s difficult to say how long any advantage the company gains will last. Pretzel buns are potentially valuable and are currently rare, at least in the fast food industry, but they aren’t particularly difficult to imitate. If Wendy’s is successful with their new product, I would fully expect to see other companies offering pretzel burgers (imitation) or some other kind of non-tradition hamburger bun (substitution) as soon as the impact of the value added becomes clear. On the other hand, McDonald’s has been selling the “McRib” product off and on for at least twenty-five years now, and Burger King only just brought out their equivalent sandwich this spring. This could get interesting…