General Industry

McDonald's Considering $5 Meal Deal Launch To Draw Diners, Source Says

By Reuters
McDonald's Considering $5 Meal Deal Launch To Draw Diners, Source Says

McDonald's US franchises are considering launching a $5 meal deal, a source familiar with the matter said on Friday, as the fast-food chain looks to draw more inflation-hit customers to its restaurants.

Global restaurant chains such as McDonald's and Starbucks have seen lower-income customers opting to eat more meals at home amid a cost-of-living crisis, forcing the companies to offer steeper promotions to attract them to their outlets.

Global Sales

McDonald's, which has a higher exposure to the lower-income cohort, saw its global sales growth slowing for the fourth straight quarter.

"I think it's important to recognise that all income cohorts are seeking value," CEO Chris Kempczinski said on a post-earnings call last month.

Shares

Bloomberg News first reported about McDonald's plans.

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McDonald's shares were up about 2% at $272.80 following the news.

'Every Dollar'

McDonald's fell short of Wall Street estimates for first-quarter sales in April as budget-conscious consumers cut back on restaurant meals and the Middle East conflict weighed on the burger chain's international sales.

Global comparable sales growth slid for the fourth straight quarter to 1.9%, with the company saying consumers turned 'more discriminating with every dollar they spend'.

International Sales

Earlier in March, McDonald's CFO Ian Borden had warned of a sequential fall in international sales in the first quarter, pressured by the conflict in the Middle East and a sluggish Chinese economy, its second-largest market after the United States.

Higher competition for breakfast hour spending in the United States has prompted the burger giant to lean on low-priced menu choices including breakfast value bundles and a Dollar Menu under the $4 price point.

Article by Reuters, additional reporting by Hospitality Ireland.