The $200 Million Failure Of McDonald's 'Arch Deluxe'

McDonald's has experienced some truly epic failures in its time, unleashing brand new products with great pomp and circumstance only to discontinue them within months. People are still talking about landmark fiascos such as McDonald's Mighty Wings and the fabled McPizza. However, there is one McDonald's flop that outdoes all the rest — one so big that it still ranks as the company's most costly failure nearly three decades later — and that's the one and only Arch Deluxe.

In the mid-1990s, McDonald's was seeing a steady drop in sales while rival brands like Burger King and Wendy's became more competitive, so they decided to upscale their menu. According to Ranker, the brand felt they were too dependent on the child demographic, so it looked to appeal to single adults. Per Eater, McDonald's specifically sought to entice affluent members of Gen X, so they approached head chef Andrew Selvaggio, who had fine dining experience from his previous work in the kitchen of Chicago's Pump Room, and asked him to create a premium burger for grown-ups. After close to a year of research and experimentation, Selvaggio put the finishing touches on the Arch Deluxe.

The Arch Deluxe was a 'grown-up' burger

The Arch Deluxe had three elements that set it apart from McDonald's standard fare. First, there was a potato roll as opposed to the familiar sesame-coated bun. Then, there was the peppered bacon. But the most important aspect of the Arch Deluxe was its sauce, a mustard-mayo mixture made with stone-ground mustard, not the yellow stuff. Before going to market, McDonald's tested its latest creation in a series of focus groups. According to NPR, the common thread in those initial trials was that people absolutely loved the Arch Deluxe, but when it finally became available to the public, the opposite proved to be true.

McDonald's spent $200 million on advertising the Arch deluxe, more than any fast food company had spent on a product launch before. Ranker recalls an ad campaign intended to show that the Arch Deluxe was made for mature palates by featuring children being disgusted by the burger's sophisticated flavors. Another series of ads showed Ronald McDonald playing golf and billiards. McDonald's even booked Radio City Music Hall for a spectacular launch event featuring the Rockettes. In their strangest move of all, the company paid choreographer Debbie Allen to create the Deluxe Line Dance, which was an attempt to start a Macarena-esque craze to promote the Arch Deluxe. 

Why the Arch Deluxe failed

In 1996, The New York Times revealed that the company expected to make $1 billion off of the Arch Deluxe in just its first year. Their big plans included expanding the Deluxe menu to include fried chicken, grilled chicken, and fried fish offerings. Depending on the variety, the Arch Deluxe sold for between $2.09 and $2.49. According to Forbes, the average price of a Big Mac in 1996 was $2.36, so McDonald's wasn't asking that much from their customers in exchange for their new premium offering. Yet, the Arch Deluxe is remembered as a dismal failure. What happened?

NPR suggests that the focus groups weren't actually representative of the average customer. The groups were made up of volunteers, making it likely that they were fans of McDonald's, fans of burgers, fans of trying new things, or all of the above. When they actually released the burger to the public, there was significantly less interest. According to Eater, franchisees didn't want to sell the Arch Deluxe because of the specialty ingredients it required them to get, and they saw poor returns on investment. Ranker adds that the ads showing kids hating the Arch Deluxe alienated the restaurant's core fanbase: families. Perhaps, McDonald's ultimately failed because it tried to be something it wasn't.