The McDonald’s restaurant on Santa Monica Boulevard, Los Angeles, California on April 1, 2024.
This comes in the wake of challenges facing consumers that lead to them working on rolling out value meals in US stores two people familiar with the matter have said.
Such a meal which may cost $5 could include items like McChicken or McDonald’s Double Cheese burger along with four chicken nuggets as well as fries and a drink.This is based on Bloomberg News report.
There is a view that lower-income customers are cutting back spending, particularly in fast food chains like these. According to Bank of America research data analyzed by BofA Securities strategist Robert Ohmes from McDonald’s to Wendy’s DAVE and Buster’s all are cost-conscious regarding spending constraints around low-income households.
For example, recently released results for the first quarter show mixed performance at McDs with U.S. same-store sales being slightly below expectations. Although more expensive prices have increased average checks some customers had been turned away due to rising costs.
“The quick-service restaurants (QSR) sector is under pressure from consumers who are becoming increasingly discerning with every dollar they spend amid mounting everyday living expenses,” stated Chris Kempczinski, CEO of the company.
He also added that affordability should be “an area of focus” for McDonald’s if it wants to attract diners.
During an earnings call last week, Kempczynski informed investors that this was one of their priorities for 2022 or beyond: A national value deal would be implemented across the country; while CFO Ian Boden noted “in this environment we’re working very closely with our owner-operators.” The vast majority — about 95% —of McDonald’s restaurants are operated by franchisees who have varying levels of control over the menu offerings but frequently disagree about promotions that might eat into their profits.
According to someone aware of this situation, McDonalds initial plan was not approved as it was a $5 value meal and further discussions on the same are ongoing. The second person said Coca Cola Increase marketing funds to make deals more attractive.
