McDonald's Successor to Dollar Menu Escalates Industry Price War
The fast-food price war is about to get even more intense.
McDonald’s Corp., the world’s largest restaurant chain, unveiled its new value-priced menu on Monday, aiming to keep its lead in an industry that’s increasingly racing for the bottom. The lineup, set to go live on 4 January, includes items such as chicken tenders, sodas, triple cheeseburgers and the Egg McMuffin.
The new offering, which will run alongside McDonald’s regular menu at restaurants, is a balancing act for the Golden Arches. If items are priced too high, customers feel like they’re getting ripped off and head to competitors. But if the prices are too low, McDonald’s own franchisees will do the grousing.
That was the case with the company’s Dollar Menu, which was phased out in 2013. McDonald’s operators thought it weighed too heavily on profit margins, but the menu was popular with customers. And its absence was felt. The demise of the Dollar Menu was seen as a contributor to a sales slump that lasted two years.
This time around, McDonald’s thinks it has a formula that can keep franchisees happy. More than 90 percent of restaurant owners have signed up to participate in the program, according to Chris Kempczinski, who runs the company’s U.S operations.
“You have to make sure it’s something we can sustain,” he said in an interview.
McDonald’s announced in October that it was planning the menu, though it didn’t give details until Monday. The idea is to shore up a comeback built on the success of all-day breakfast and more targeted discounts like McPick 2 for $5.
When the new menu hits next month, customers will be able to get a handful of options for $1, $2 or $3. The cheapest items include sodas, McChicken sandwiches, a sausage burrito and cheeseburgers. The sausage McMuffin with egg is on the menu for $3, alongside a new chicken sandwich. And the company’s buttermilk chicken tenders, which sold out last month after a brief run, are returning to the menu -- with an order of two costing $2.
One popular item that’s absent is french fries. Kempczinski said the company spent months trying to figure out the best way to construct the new menu and ultimately decided it was compelling without fries.
“We didn’t need fries to make it attractive,” he said.
News by Bloomberg - edited by Hospitality Ireland