TIME Fast Food

McDonald’s Objects to Russia Restaurant Closures

RUSSIA-UKRAINE-CRISIS-US-TRADE-FOOD-MCDONALDS
People sit on the terrace of a closed McDonald's restaurant, the first to be opened in the Soviet Union in 1990, in Moscow on Aug. 21, 2014. Alexander Nemenov—AFP/Getty Images

The Russian government says conditions in some of the chain's restaurants are unsanitary

McDonald’s on Friday objected to the Russian government’s decision to close 12 of its restaurants in the country, following weeks of highly publicized investigations into health and safety at the fast food giant’s locations.

“We are closely studying the content of the agency documents to determine what should be done to re-open the restaurants as soon as possible,” the company said in a statement. “We do not agree with the court’s decision and will appeal against it in accordance with the procedures established by the law.”

The investigations come as the United States and Russia face heightened tensions over the crisis in Ukraine. While Russian authorities maintain that the restaurants have been closed for health reasons, critics say the closures are a response to U.S. sanctions against Russia.

The Russian government is continuing “microbiology tests, sanitary and chemical tests” at other McDonald’s restaurants in Russia, according to reports.

TIME Food & Drink

There’s a $10 Secret Menu Item at Arby’s Called the Meat Mountain

And it's quite literally a mountain made of ALL the meats

Well, this is truly the stuff of Ron Swanson’s wildest dreams. Arby’s has a secret menu item (meaning it’s not on the official menu but you can request it and they’ll make it for you) called the Meat Mountain. It’s a truly formidable tower of meats, and it all started because of this promotional photo:

Arby’s created that poster to remind consumers that the chain sells plenty of meats besides its famous roast beef, the Washington Post explains. This marketing strategy worked, apparently, because people started coming in asking if they could order that entire stack o’ meats. And lo, the Meat Mountain was born. Here’s what the $10 monstrosity-on-a-bun includes, from the bottom up:

  • 2 chicken tenders
  • 1.5 oz. of roast turkey
  • 1.5 oz. of ham
  • 1 slice of Swiss cheese
  • 1.5 oz. of corned beef
  • 1.5 oz. brisket
  • 1.5 oz. of Angus steak
  • 1 slice of cheddar cheese
  • 1.5 oz. roast beef
  • 3 half-strips of bacon

A few people have been brave enough to try it:

Unfortunately, the Meat Mountain doesn’t seem to be something all Arby’s employees know about just yet. The Wire’s Adam Chandler ventured to an Arby’s in Queens in search of this elusive meat monster and was met with blank stares. A manager told him the request was impossible. So he ordered everything required to assemble the Meat Mountain himself, spending $29 instead of the expected $10.

But can you really put a price on the incredible feat of scaling the formidable Meat Mountain?

TIME Fast Food

Burger King Blasted as ‘Traitor’ for Deal That Would Move HQ to Canada

"Order a Whopper w extra tax avoidance and a said of Traitor Tots"

Burger King’s acquisition of Tim Hortons, announced Tuesday, would see the fast food giant move its headquarters from the United States to Canada if the deal goes through. That’s sparked some serious backlash on social media from critics dubbing the company a #traitor and #UnAmerican, as the company would likely wind up paying less in taxes if it were to reincorporate in the Great White North.

Dave Geller, for one, tweeted that his followers should “order a Whopper w extra tax avoidance and a said of Traitor Tots” the next time they’re at Burger King:

Geller is one of many protestors seeing the Warren Buffett-assisted merger as a means to dodge U.S. taxes: (Although Burger King would still have to pay American taxes on domestic U.S. sales.)

Burger King’s Facebook has been flooded with negative comments as well. A recent post on the fast food chain’s Facebook prompting followers to “Say yes to cookies,” for example, is being met with critical responses to “Say ‘NO’ to tax dodgers!” alongside calls for a boycott:

 more dessert please
Burger King

The days of an ecstatic, chicken fries-loving social media frenzy has come to a close.

TIME Companies

Burger King and Tim Hortons Tie the Knot

A Burger King sign and a Tim Hortons sign are displayed on St. Laurent Boulevard in Ottawa, Canada on Aug. 25, 2014.
A Burger King sign and a Tim Hortons sign are displayed on St. Laurent Boulevard in Ottawa, Canada on Aug. 25, 2014. Sean Kilpatrick—AP

And elope to Canada

Fast food giant Burger King has signed a deal to acquire coffee chain Tim Hortons for more than $11 billion, creating the world’s third largest fast-food conglomerate and decisively transferring the global headquarters of the iconic American brand into Canadian territory.

The companies announced the deal on Tuesday, framing it as an opportunity to expand the global footprint of the two companies, which have 18,000 restaurants across 100 countries. “The new global company will be based in Canada, the largest market of the combined company,” the companies said in a joint press release, confirming speculation that the merger would enable Burger King to arrange a “tax inversion,” or a merger with a foreign company that enables a U.S. company to reincorporate abroad under a more favorable tax environment. A recent spate of inversions has drawn fire from President Obama and administration officials, who have vowed to crack down on the practice.

Tim Hortons shareholders will receive C$65.50 in cash and 0.8025 common shares of the new company, representing a total value of C$94.05 based on the closing price of Burger King’s stock on Monday, which climbed on news of the impending deal.

Alex Behring, executive chairman of Burger King and managing partner at the private venture firm 3G Capital, will take over as executive chairman of the company, while Marc Caira, president and CEO of Tim Hortons, will be appointed vice-chairman. Burger King CEO Daniel Schwartz will become the new company’s group CEO.

MONEY wall street

Burger King Wants to Cut its Exposure to Hamburgers, Not Just Taxes

While all the focus is on the tax savings Burger King could enjoy through a Canadian inversion, the real benefit of buying Tim Hortons is boosting breakfast and coffee sales.

The initial media reaction is that Burger King is turning its back on America by reportedly seeking to buy the Canadian coffee-and-doughnut chain Tim Hortons. After all, it can move its headquarters to Ontario to pay less in taxes.

In reality, Burger King BURGER KING WORLDWIDE INC BKW 2.3315% may be more interested in turning its back on the hamburger.

The $11 billion burger chain is in talks to buy Tim Hortons TIM HORTONS INC THI 0.1369% , Canada’s biggest fast-food chain with a market value of around $10 billion. The deal would reportedly involve a so-called inversion, where Florida-based Burger King would for tax purposes be headquartered in Canada, where the top corporate tax rate is 15%, versus 35% in the U.S.

But as The New York Times pointed out, Burger King’s tax rate is actually closer to 27%, and this inversion really wouldn’t cut its taxes that much because the majority of its revenues are generated in the U.S. Even if it moved to Canada, BK would still be on the hook for U.S. taxes on sales made on American soil.

No, there’s something else driving this deal, and it could be that Burger King wants to abdicate its rule over burgers and switch kingdoms.

As Americans’ tastes have changed, burger sales, which have long dominated the fast-food landscape, have started to stall. Last year, for instance, revenues at Burger King restaurants in the U.S. that have been open for at least a year fell 0.9%, while U.S. same-store sales at McDonald’s slumped 0.2%. By comparison, Starbucks STARBUCKS CORP. SBUX 0% reported an 8% rise in comparable store sales in fiscal 2013 while Dunkin’ Brands DUNKIN BRANDS GROUP DNKN -0.0689% , the parent company of Dunkin’ Donuts, enjoyed a 3.4% rise in revenues.

This isn’t just a short-term problem. Analysts at Janney Montgomery Scott recently noted that while three of the five biggest fast-food chains in the U.S. are still hamburger joints (McDonald’s, Wendy’s, and Burger King), by 2020 that number should drop to just one: McDonald’s.

Meanwhile, coffee chains Starbucks and Dunkin’ Donuts are expected to move up the ranks. And McDonald’s is itself doubling down on coffee, pushing more java not just in its restaurants but also on supermarket shelves.

Noticing a common theme here?

In the fast food realm, there are three buzzy trends right now. There’s the rise of the higher-end “fast-casual” restaurants such as Chipotle Mexican GrillCHIPOTLE MEXICAN GRILL INC. CMG 0.1195% . There’s the explosion of cafe coffee shops, which according to the consulting firm Technomic was the fastest-growing part of the fast-food industry last year, with growth of 9%.

Darren Tristano, executive vice president at Technomic, recently noted that “the segment continues to be the high-growth industry leader with Dunkin’ Donuts and Tim Hortons rapidly expanding.”

He added:

[The] coffee-café segment competition will heat up, and new national chain, regional chain and independent units will increase major market penetration. Smaller rural and suburban markets will be getting more attention. Fast-casual brands in the bakery-café segment like Panera Bread, Einstein Bros. Bagels and Corner Bakery will also create new options for consumers as more locations open. Quick-service brands like McDonald’s will provide lower-priced, drive-thru convenience that provide value-seekers with a strong level of quality that is also affordable.

And the third area of growth in fast food is breakfast. According to The NPD Group, while total “quick serve” restaurant traffic fell by 1% at lunch and dinner time in 2013, business at breakfast time rose 3%.

“Breakfast continues to be a bright spot for the restaurant industry as evidenced by the number of chains expanding their breakfast offerings and times,” says Bonnie Riggs, NPD’s restaurant industry analyst.

Now, while Burger King isn’t really positioned to go after the Chipotles of the world, the acquisition of Tim Hortons could quickly make it a bigger player in the coffee and breakfast markets, where it has languished far behind McDonald’s and Dunkin’ Donuts.

Tim Horton’s already controls 75% of the Canadian market for caffeinated beverages sold at fast-food restaurants, according to Morningstar, and more than half the foot traffic at the key morning rush hour.

Morningstar analyst R.J. Hottovy noted recently that same-store sales throughout the chain are expected to rise 3-4% over the next decade, which would be a marked improvement over the same-store declines that Burger King has been witnessing lately.

Even though Burger King is a bigger company by market capitalization, it generates less than half the $3 billion in annual revenues that Tim Hortons does. This means that by buying the Canadian chain, Burger King will be able to buy the type of same-store growth that it could not muster with hamburgers and fries.

So the next time you go to Burger King, don’t be surprised if they ask you “would like some coffee to go with that?”

SLIDESHOW: Burger King’s Worldwide Journey To Canada

 

 

TIME Companies

Burger King Might Become a Canadian Company

The burger behemoth could reincorporate in Canada, and thereby lower its tax liabilities, if it buys donut chain Tim Hortons

+ READ ARTICLE

Burger King may soon announce a whopper of a deal aimed at lowering its taxes by moving the 60-year-old company’s base outside the U.S., according to a new report.

Citing unnamed sources, the Wall Street Journal reported Sunday that Burger King Worldwide Inc. was “in talks” to buy Canadian donut chain Tim Hortons. The move would allow the hamburger establishment to reincorporate in Canada.

Though legal, the practice known as tax inversion has been criticized in some government circles as a loophole for mega-companies in the U.S. to avoid paying a fair share of taxes for income earned outside the country. Burger King has 13,000 stores in 98 countries, making for a large chunk of international earnings.

Just last month, President Obama had harsh words for this kind of maneuver. “These companies are cherry-picking the rules. And it damages the country’s finances,” he said.

But it might not be taxes alone that sweeten the deal for Burger King, if the Hortons acquisition goes through. BK’s top competitor, McDonalds, has enjoyed success with its own cafe brand McCafe — and the Canadian coffee and donut perveyor could give a boost to the King’s appeal at breakfast time, WSJ reports.

[WSJ]

TIME Food & Drink

McDonald’s Is Testing Mozzarella Sticks With Marinara Sauce

The chain is currently testing the product in New York, New Jersey and Connecticut

We’re still trying to sort out our feelings about the fact that the next addition to the McDonald’s menu might be mozzarella sticks.

For now, it’s just a test. The fast food joint is selling mozz sticks in select locations across New York, New Jersey and Connecticut, a McDonald’s spokesperson confirms to TIME. They come three to a package (with a side of marinara sauce, of course) and cost just one dollar.

A few people on Twitter have shared photos of the surprising find:

Yup, they look like your average, everyday mozzarella sticks. For now, it all depends on how the test goes. They were previously available at locations in the U.K., and there’s a small initiative to make them a permanent fixture on the menu.

No word yet on what name McDonald’s will use if they do add them to the U.S. menu, but it’s natural to assume they’ll go with something like McMozzarella Sticks. Or perhaps McMozzies. Stay tuned.

TIME russia

Russia Is Closing McDonald’s Restaurants Over Health Violations

The oldest of Moscow's McDonald's outlets, which was opened on Jan. 31, 1990, is closed on Thursday, Aug. 21.
The oldest of Moscow's McDonald's outlets, which was opened on Jan. 31, 1990, is closed on Thursday, Aug. 21. Alexander Zemlianichenko—AP

But the crackdown comes amid tit-for-tat sanctions between Russia and the West

Russian regulators are targeting McDonald’s restaurants in a crackdown that authorities say is a matter of food safety.

But the closure of several Russian McDonald’s restaurants and unscheduled checks of several others comes on the heels of tit-for-tat sanctions between Russia and Western countries over the ongoing conflict in Ukraine. Earlier this month, Russian authorities banned a wide array of food imports from the United States, the European Union and several other countries after Western powers enacted economic sanctions against Moscow.

According to Reuters, the Russian state food safety agency temporarily shuttered four restaurants on Wednesday, including the world’s busiest McDonald’s store in Moscow’s Pushkin Square, citing breaches of sanitary rules. On Thursday, the agency said it was conducting checks on other outlets across the country.

The agency has denied that its actions are politically motivated, according to Reuters.

“We are aware of what is going on. We have always been and are now open to any checks,” a spokesperson for McDonald’s in Russia told Reuters. The chain operates 438 restaurants in the country.

[Reuters]

MONEY Fast Food

Taco Bell Breathes New Life Into Fast-Food Dollar Menus

Taco Bell exterior
David Paul Morris—Bloomberg via Getty Images

On Monday, the fast food chain unveiled a new "Dollar Cravings" menu, with around a dozen items priced for a buck. For the historically cheap chain, in some cases that actually represents an increase in price.

The new Dollar Cravings menu hit Taco Bell restaurants on Monday, with a total of 11 items—some new to customers, others that have been around a while—priced at a flat $1 apiece. The move comes at a time when other big players in fast food, notably McDonald’s and Wendy’s, have been shifting away from dollar menus toward more value-oriented pricing, with items priced at $2 or even $5, alongside a few options still listed at $1.

What’s especially interesting about the new dollar menu at Taco Bell is that for this extraordinarily low-priced chain, charging $1 for some items actually represents an increase in price. Taco Bell prices can vary depending on location, but according to one independent price tracker online, the chain already had items on the menu for 99¢, like the Crispy Potato Soft Taco, Cinnamon Twists, and the Cheese Roll-up. Cinnamon twists and a slightly different potato taco are now on the dollar menu, meaning they’re actually more expensive (by a penny) than they were before. An order of Cinnabon delights is on the dollar menu for breakfast, but before the “change,” a two-pack of Cinnabons was also listed on menus for $1. That was and still is the price point for a few other Taco Bell breakfast items as well.

The other options on Taco Bell’s new Dollar Cravings menu include the Shredded Chicken Mini Quesadilla, Beefy Fritos Burrito, Spicy Tostada, Cheesy Bean and Rice Burrito, and Triple Layer Nachos. The $1 price point for these items is meant to present a compelling and tempting alternative to options like the McDonald’s Jalapeno Double, a limited-time special offer that has been all over TV commercials lately. It’s part of McDonald’s “Dollar Menu & More” options, and it costs $2. To help you with the math, that’s double the price of, say, a Beefy Fritos Burrito.

But again, let’s put this all in perspective. For historically cheap Taco Bell, known for rolling out burritos for 59¢ and 79¢ during the recession and pricing entire meals for just $2 not long ago, a dollar menu means that many customers might actually pay more (not less) than they used to.

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