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McDonald's USA beef buyer visits with Agriculture Online

As a guest speaker at a recent trade conference, McDonald's USA's president told a group that the restaurant chain was looking to more chicken products to help boost sales in 2006 and beyond. Following a recent interview with McDonald's USA's beef buyer and a company spokesperson, Agriculture Online is presenting a two-part series on how U.S. cattle producers should view the company's sales strategy that highlights chicken, as well as other impacts to U.S. beef interests.

For the next two days, Agriculture Online will feature a question and answer session with Robert Cannell, McDonald's USA director of supply chain and leading beef buyer. Joining Cannell in answering a few questions is Danya Proud, McDonald's USA spokesperson.

Q: Recently, Ralph Alvarez, president of McDonald's North America, told the National Retail Federation the hamburger giant will focus on chicken products in 2006, because those products are seeing increased sales, whereas beef sales are flat from a year ago. Does that mean fewer purchases of beef this year by McDonald's?

Proud: We are a customer-related company and everything we do revolves around meeting the needs of our customers. It's been made clear to us the past few years we need to be providing customers with menu choices and variety. We have offered more chicken menu items as of late, but we have always had chicken products on our menu. It's no secret chicken consumption has been increasing in the U.S. for some time. This doesn't mean we have plans to sell less beef or altering our beef options, quite the contrary. Yes, our customers are telling us they want more chicken, but we are a hamburger business and always will be a hamburger business. Right now, chicken makes up one-third of our menu. Annually, we purchase about 1.0 billion pounds of beef and 600 million pounds of chicken. We still are the largest purchaser of beef. It's just that the beef sales are not seeing the increased rate the chicken sales are.

Q: What does the future hold for McDonald's USA to offer a steak sandwich, add beef to the breakfast menu, and offer beef finger foods?

Proud: Unfortunately, I can't give specifics, but rest assured we do our due diligence in looking at what our customers are telling us and staying on top of consumer trends. Stay tuned, there are some exciting things in the product pipeline.

Q: Robert Cannell, director supply chain, McDonald's USA, can you share your background. Do you have a rural background?

Cannell: I've been in the meat business since the late 1970s. I was involved in the retail, commercial, packing house, and retail meats sides of the industry. I've been around the meat business since high school.

Q: Do you have a background in cattle or did you grow up on a farm?

Cannell: No, I started with the meat side. What I know about the cattle industry came later.

Q: In the past, what emphasis has McDonald's put on U.S. beef and what percentage of the beef market has McDonald's USA held?

Cannell: We've always looked at supplying our products from the places where we do business. Utilization of U.S. beef is our first choice, always has been and always will be.

Q: More recently, of the amount of beef you buy annually, how much of that is U.S. beef? Plus, what plans in 2006 do you have for purchases of U.S. beef?

Cannell: The amount of beef we purchase outside of the U.S. comes from just two different countries, Australia and New Zealand. The amount we buy from them fluctuates with different supply cycles, and other factors. The first priority in my position is assured supply. I have to make sure there is 1.0 billion pounds of beef we can sell in our restaurants. With that said, the absolute highest amount of foreign beef we have purchased is 25% of our annual total and we have no plans to change our purchasing structure.

Q: There are large supplies of chicken right now and with McDonald's fighting profit battles, it makes sense chicken would be a preferred choice compared to beef to increase sales. How do you respond to that concern?

Cannell: I'm not involved in company strategy, but I can tell you these sales strategies don't come about in a very short period of time. These new chicken products coming out were not a knee-jerk reaction.

As a guest speaker at a recent trade conference, McDonald's USA's president told a group that the restaurant chain was looking to more chicken products to help boost sales in 2006 and beyond. Following a recent interview with McDonald's USA's beef buyer and a company spokesperson, Agriculture Online is presenting a two-part series on how U.S. cattle producers should view the company's sales strategy that highlights chicken, as well as other impacts to U.S. beef interests.

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