McDonald’s Corp. officials said the dining out environment around the world would remain “challenged” in the fourth quarter and require compelling value platforms, including the national rollout of the Dollar Menu & More in the United States.
A spokeswoman for the Oak Brook, Ill.-based company confirmed that all of McDonald’s more than 14,000 restaurants in the United States would replace the Dollar Menu with the Dollar Menu & More offering Nov. 4. National advertising for the platform begins Nov. 11.
The expanded, tiered value menu, which was tested in five markets this year, will offer $1 items from the Dollar Menu, as well as sandwiches at prices around $2 and shareable items around a $5 price point.
“This is one of the ways that we can maintain the Dollar Menu in the face of rising commodity and labor pressures, but also get a little more margin basis on some of the products at $2 and some of the products at higher price points,” chief executive Don Thompson said during McDonald’s third-quarter earnings call. “The franchisees support this.”
The introduction will follow a third quarter in which same-store sales rose only 0.7 percent in the United States, when McDonald’s tried to build sales of new core offerings by moving the Monopoly game up into July and putting a major national ad campaign behind the Mighty Wings limited-time offer. However, Thompson said, while those initiatives performed within expectations, they did not offset traffic weakened by lower consumer confidence and a drag on discretionary spending.
According to a research note from securities analyst Andy Barish of Jefferies, same-store sales in the United States dipped 0.1 percent for McDonald’s, and comparable sales are tracking flat for the month of October.
The stagnant informal-eating-out market is not expected to improve in the fourth quarter in the United States, Thompson said, making the rollout of Dollar Menu & More even more important.
“It does keep a base of customers,” he said. “While it only represents 13 percent to 15 percent of sales, you’ve got about a third of the customers that will leverage that Dollar Menu in some form or fashion. It is a strong part of the base.”
McDonald’s would continue to weave in new-product news for core items and premium limited-time offers, like Mighty Wings or the Southwest Chicken Premium McWrap.
“Those limited-time offers … help not only with margin, but they help with the excitement for the customer,” Thompson said. “We need to be able to balance both of those two into the barbell, and we have to fill in what’s in between. That’s the reason for Dollar Menu & More.”
The evolution of the Dollar Menu & More is analogous to previous tweaks of the Dollar Menu, such as at the start of the recession when McDonald’s replaced the Dollar Menu’s double cheeseburger with the McDouble. The brand weathered the recession better than peers because of moves like that, Thompson noted, though he admitted that competitors now have improved their value propositions and continue to launch new products.
Down the road, McDonald’s will bring back Mighty Wings, which the company expects to sell about 35 million pounds of during the promotional window.
McDonald’s operates or franchises more than 34,500 restaurants worldwide.
Contact Mark Brandau at email@example.com.
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