Can McDonald’s Battle Inflation Woes with Cheap Meal Deals?

A new low-cost promotion from McDonalds could be the next best move as the fast-food corporation looks to tackle falling foot traffic across the country.

$5 Meal Deal Incoming

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Fast-food monolith McDonald’s is set to introduce a new $5 meal deal starting next month, in an apparent bid to bring back customers who have grown frustrated over the franchises soaring US prices. 

What’s On Offer

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Starting on June 25 the deal will give customers the chance to purchase a McChicken or McDouble burger, a four-piece chicken nugget box, a small drink, and fries. 

One Month Only

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Customers should keep in mind that the deal is for a limited time only, with a run of just one month, ending in July.

More Expensive in Some Locations

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While the deal will be offered nationwide, it should also be noted that the deal may be more expensive in states like California and Hawaii where franchises have higher-than-average maintenance costs. 

Customers Turn Away

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A $5 meal deal comes at a time when McDonald’s customers around the country have lobbed criticisms at the burger giant for its prohibitively high inflation prices, as lower and medium-income households contend with a cost-of-living crisis. 

Newest Strategy

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According to the Wall Street Journal, the new deal is a direct strategy designed to address falling foot traffic in restaurants across the nation. Franchise owners at the company have directly addressed the fact that it is losing customers and no longer offers competitive affordable prices for customers. 

“Sales Have Slowed Considerably”

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“Our sales and guest-count momentum have slowed considerably. The fact is that we’ve lost our momentum and we need to get it back,” one franchise owner said in an email to other operators in April.

Minimum Wage Hikes

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This is particularly noticeable in states like California, where a recent $20-an-hour minimum wage hike for fast food workers has caused McDonald’s prices across the state to skyrocket. 

Staggering Menu Prices 

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For example, ordering a Big Mac combo in some locations can now set you back as much as $18, while a single Egg McMuffin can cost $7.29.

100% Increase in 10 Years

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The last decade has been a shock for long-time customers, who have seen average McDonald’s prices increase by 100% since 2014, according to a study by FinanceBuzz. 

Losing It’s Demographic

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McDonald’s President and CEO Chris Kempczinski has also acknowledged that its target demographics, which tend to be low-income workers earning less than $45,000 a year, are now refraining from fast-food purchases in higher numbers.

“The Consumer is Very Discriminating”

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“The consumer is certainly being very discriminating in how they spend their dollar,” he told investors in a call earlier this year. 

Issues At Every Level

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He also acknowledged that it was a problem across the board, not just for low-income earners.  “It may be more pronounced with lower-income consumers, but its important to recognize that all income cohorts are seeking value,” he added.

Hallmark of the Brand

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The company is now championing its next promotion, which is a partnership between McDonalds and soft drink company Coca-Cola, as a next step to winning back consumer trust. 

“Great value and affordability have always been a hallmark of McDonald’s brand,” said John Palmaccio, a McD’s franchise owner and chair of the Operators National Advertising Fund.

“The Power and the Promise”

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“All three legs of the stool are coming together to deliver that at a time when our customers really need it,” he continued. “This is the power and promise of the Golden Arches.”

Reasons to Be Confident

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Though it only runs for a month, McDonalds has reasons to be confident that the $5 meal deal will be a hit with customers for its short run. In many locations, these items can cost twice as much when purchased individually. 

Internal Debates

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However, many franchise owners have expressed concerns and sparked internal debates on whether the promotion will generate enough revenue and attention to justify it. 

Addressing the Customer

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The company responded to questions and concerns in a statement. “We know how much it means to our customers when McDonald’s offers meaningful value and communicates it through national advertising,” it said in relation to the promotion.

“Never More Important”

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That’s been true since our very beginning and never more important than it is today,” the statement added.

Other Companies Follow

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McDonald’s is not the only major fast-food and takeout chain that is struggling, as consumers opt to eat at home instead. Coffee giant Starbucks has also begun offering big promotions to get customers back in the door.

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The postCan McDonald’s Battle Inflation Woes with Cheap Meal Deals? first appeared on Liberty & Wealth.

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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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