McDonald’s is thinking about adding a $5 value platform to bring price-conscious consumers back into the fold, according to multiple media reports.
The deal would involve either a McChicken, McDouble, or four-piece chicken nuggets, along with fries and a drink. Sources told CBS MoneyWatch that McDonald’s is still negotiating the value offer with franchisees.
The chain is looking to compete with other fast-food concepts offering these types of everyday options, like Wendy’s $5 Biggie Bag, Domino’s $7.99 carryout and $6.99 Mix and Match deals, or Burger King’s $5 Duos.
McDonald’s indicated a nationwide value platform was coming during its Q1 earnings call at the end of April. The burger giant plans to use its big marketing engine to advertise a deal available everywhere instead of “doing it in 50 different ways with local value,” CEO Chris Kempcinzksi told investor analysts. McDonald’s believes it can work because of what it’s seen worldwide. There’s a McSmart Menu in Germany and France that’s been met with high consumer awareness, an everyday value menu in Spain that has a convenient bundle for every price point, and a new entry-level value platform in Poland that’s driving traffic.
The CEO said guest frequency is dropping across almost all major markets. That tells McDonald’s that customers are “looking for reliable everyday value now more than ever.”
“We have a lot of great value out there in the market. We’re just doing it in a very fragmented way,” Kempczinski said during the Q1 earnings call. “And so the opportunity for us is how do you maybe pull back a little bit on all the local value that we’re offering, which, frankly, we don’t have very high awareness on, and how do you coalesce and drive awareness around a national value proposition? So I think there’s a smart way to do this that can end up being net neutral to a franchisee P&L.”
The prices of popular McDonald’s items have risen 100 percent on average since 2014, according to a study by FinanceBuzz. That’s more than triple the U.S. inflation rate during the same period. The biggest jump has been the McDouble, which has grown from $1.19 to $3.19 over the past 10 years, and medium fries, which has risen from $1.59 to $3.79. McDonald’s had the biggest increase in menu prices among all the chains FinanceBuzz studied (Popeyes, Taco Bell, Chipotle, Jimmy John’s, Arby’s, Burger King, Chick-fil-A, Wendy’s, Panera, Starbucks, and Subway).
The chain’s U.S. same-store sales increased 2.5 percent during the first quarter thanks to average check growth, menu price increases, effective marketing campaigns featuring core menu items, and continued expansion of digital and delivery.
