The year for McDonald’s began as the company hinted it would—with something we hadn’t seen in nearly six calendars. The McValue platform, which arrived in early January, marked the first time in well over five years the brand showcased a unified value platform message across the U.S. It’s a push that began the previous spring when McDonald’s $5 Meal Deal was announced to counter an increasingly soft spending climate, namely at the lower-income level of the chain’s traffic base.
McDonald’s leading up to 2024 appreciated steady top-line expansion on price (30 percent same-store sales growth from 2019 to then), like other chains, but faced negative guest counts that reached a head as guests began to cut back visits amid ongoing inflation. McDonald’s benefited from the top trading down. Higher-income customers left other categories, as did middle-income ones. Eventually, it brought diners into McDonald’s who might not have shown up when pricing wasn’t so widely sensitive. However, as hikes sustained, and macro conditions remained stressed, restaurants began to compete for fewer consumers who were visiting less frequently. And that led to the “street-fighting mentality,” CFO Ian Borden referenced last April.
So McDonald’s began to work toward reinforcing its value strength by seeking an everyday pillar it could put national marketing dollars behind instead of a local approach. The $5 Meal Deal arrived in late June, had some positives and less positives, but did accomplish its goal of retrenching McDonald’s place among value seekers. It went from a limited run into an extended one, and to the doorstep of the holistic McValue Platform, which houses all of the burger chain’s value offers in one place, including meal offers—like the current $5 Meal Deal—in-app promotions, local food and drink specials, and a new Buy One, Add One for $1 offer at breakfast and lunch/dinner. Some notable in-app offers include medium fries with a $1 purchase every Friday in 2025 and a free McCrispy chicken sandwich for new app users.
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Unsurprisingly, McDonald’s wasn’t alone in elevating value in 2025: Subway released a $6.99 6-inch deal; Taco Bell rolled out $5, $7, and $9 Luxe Cravings Boxes, Dunkin’ got into the $5 game, and on this battle went.
Like any example in fast-food history, steep discounts often prove to be a trial driver. Yet what’s the next step?
BTIG analyst Peter Saleh recently conducted a series of franchise checks at McDonald’s to take stock of these latest moves. As expected, he said, operators suggested Q4 2024 and Q1 2025 same-store sales, so far, have been tepid, owing to the brand’s food-safety incident in late October ($100 million went toward the recovery effort), cold January weather, and varied sales recovery.
Franchisees said they saw solid momentum in the first half of October on the heels of the Chicken Big Mac, with comps in the mid-single-digit range, before observing a 17–20 percent impact from the E. coli news on the 22nd. Since, reports have been mixed (South and Southeast took snow-laced hits they normally don’t). Some operators told Saleh they returned to the mid-single digits by December. Others stayed negative. One notable takeaway across—a high percent of sales on discount. The McValue platform, $5 Meal Deal, and app/loyalty discounts, Saleh said, were accounting for more than a third of sales, according to some franchisees—three times the company’s historical mix, “and the highest we can recall.”
“We believe McDonald’s is over-indexing to value, as the discount mix is roughly 3X the historical average of low-teens,” Saleh wrote in a note. “In fact, some franchisees indicated that food costs as a percent of sales have not been this high in 6–7 years, implying margin pressure on their restaurants. Several franchisees raised prices on the BOGO items before the deal went into effect to protect margins.”
Saleh, in turn, reduced his Q4 2024 (will be reported February 10) and Q1 2025 U.S. same-store sales estimates from 2 and 1.5 percent, respectively, to 0.5 percent (same-store sales rose 0.3 percent in Q3 2024 on average check growth offset by slightly negative traffic; that quarter did not account for the E. coli outbreak).
Franchisees said plunging temperatures and winter weather to start 2025 dampened performance, especially at breakfast, even with McValue factored in.
Just from a logistics standpoint, McDonald’s February will be a day shorter (no Leap Year) this go-around, resulting in a 350-basis-point hit for the month and 110 basis points for the quarter, and Saleh said menu news of late has been light, partially owing to the food safety incident. Checks did, though, hint the McRib performed well in December and chicken tenders are potentially planned for late-April, followed by the much-anticipated return of Snack Wraps over the summer—a product that left most U.S. menus in 2016, with some restaurants keeping them on through 2020. Introduced in 2006 and priced at $1.29, it’s likely the Snack Wrap not only gives McDonald’s another marketing piece with strong nostalgic pull, but one that can provide a consistent value entry point, either as an add-on or a menu item with ladder-up potential. It’s still available in other parts of the world. The Canadian side of McDonald’s launched a refreshed McWrap and Chicken Snack Wrap lineup in June 2023, including Zesty Lime, Sweet Chili, Chicken & Bacon, Spicy Buffalo Chicken, and Ranch Chicken. They’re available in the U.K., too.
Beyond value, this launch also amplifies a chicken platform McDonald’s said in July had reached parity with beef sales. CEO Chris Kempczinski noted the category is twice the size of beef globally, and growing at a faster rate. The McCrispy Chicken Sandwich itself is a $1 billion brand across several markets.
The Snack Wrap will also directly compete with Burger King’s Royal Crispy Wraps, which debuted in August 2023 at $2.99 each.
Returning to present trends, however, Saleh said weaker sales in January (weather) made it difficult to assess the McValue platform’s broad performance to date. While it’s generating sales, he said, franchisees indicated there was too much noise in recent weeks to present a verdict.
Still, conversations note the BOGO is a mid-teens percent of mix, while the $5 Meal Deal is still in the low double-digits, placing the total discount block north of 30 percent, as mentioned, when including existing app/loyalty discounts (mid-single digits).
Saleh feels the challenge awaiting McDonald’s in the months and quarters ahead will be weening customers off deep discounts. The chicken tenders and wraps are expected to roll out at full price, suggesting the brand’s heavy advertising push toward deals will continue for at least 2–3 more months. The $5 Meal Deal is approved through July and could get extended further (as it has before). “We heard a few markets have already extended the deal through year-end,” Saleh said.
Largely, franchisee sentiment has rode a rollercoaster over the past several years, Saleh said. It improved when McDonald’s backed off the PACE (Performance and Customer Excellence) requirements that hung a strict grading system over franchisees. Operators said market conditions, inflation, rising prices, and staffing made it difficult to correctly measure to stringent standards, store to store. Units were scheduled to receive between six and 10 visits from corporate and third-party assessors—beyond normal inspection cadences for local food safety and codes officials.
Saleh said sentiment deteriorated more recently as comps struggled and the food safety concerns arose. Two weeks ago, more than 400 owner/operators met in Denver, he said, to discuss these issues without inviting corporate to the meeting.
He claims several franchisees believe McDonald’s cost-cutting efforts under the Accelerating the Arches plan was to blame for the food safety incident, as McDonald’s previously had a manager for just about every major supplier, overseeing product and processes. “Under the new scheme,” Saleh said, “many of those positions have been eliminated in favor of supplier or third-party oversight, under the guide of ‘self-managed excellence.’”
“It’s impossible to determine if this food safety issue could have been avoided with greater oversight,” he continued. “Franchisees couldn’t definitively say so, but noted it has been several decades since the system had a major food safety incident.”
QSR magazine reached out to McDonald’s corporate for comment on the claims but had not heard back as of press time.
A fresh theme Saleh heard was concern about the performance of new units and the high cannibalization rate of existing sales. Some operators, he said, shared new units were generating sales of $250,000–$1 million below McDonald’s forecasts. “So while these units are still profitable, they are not meeting projections,” Saleh said. “Franchisees also noted that new locations are cannibalizing existing unit sales by upward of 20 percent. This suggests that the faster pace of development in the U.S. will be a greater drag on same-store sales, and bears watching as McDonald’s aims to accelerate the pace of new store openings.”
On that latter point, as a refresher, McDonald’s in December 2023, laid out a plan to reach 50,000 locations by 2027.
On a different topic, Saleh added he’s yet to find a franchisee or executive concerned about the change in immigration policy and the impact it could have on labor available and/or wage rates. This was true, he said, throughout the ICR Conference in Orlando. Operators and C-suite executives alike claimed to hire only documented, legal labor, and therefore don’t believe any change in policy would impact their ability to hire. “While we appreciate that perspective, we remain concerned that any restrictions on immigration could impact hourly labor for independent restaurants and other industries, shrinking the labor pool and driving wage rates higher in an already tight market,” Saleh said.