What is in this article?:
- McDonald's tests tiered Dollar Menu & More
- Kitchen complications
Industry consultants say the move could oust the Extra Value Menu and invite more operational issues for franchisees.
McDonald’s Corp.’s test of a “Dollar Menu & More” offering poses a new value proposition to guests, but its effect on owner-operators’ ability to operate their kitchens or grow profitability is far less clear, two franchise consultants said.
The Oak Brook, Ill.-based restaurant chain confirmed earlier reports that a tiered Dollar Menu & More, currently in test in five markets, would augment the Dollar Menu with two additional price tiers — $2 and $5 in some markets, or $1.79 and $4.99 in others — that include other sandwiches or “shareable” items like 20-piece Chicken McNuggets.
“While no official changes have been made to our current Dollar Menu, we continue to evaluate and test the best value options, including the current Dollar Menu & More test, for both our customers and McDonald’s owner-operators,” the brand said in a statement emailed to Nation’s Restaurant News.
However, while some industry observers surmised that this new iteration of the Dollar Menu — which supposedly would enable McDonald’s to eliminate the Extra Value Menu in favor of a single value platform — could grow sales and perhaps profitability, it likely would not resolve the issues of menu complexity and operational bottlenecks, which are among the grievances franchisees have expressed to the franchisor.
Moving beyond $1
Richard Adams, a former McDonald’s owner-operator who now consults franchisees with his San Diego-based company Franchise Equity Group, gave the test of a Dollar Menu & More a mixed review. He called it “a step in the right direction” but added that McDonald’s should have made its course correction earlier from 2012’s introduction of the Extra Value Menu.
McDonald’s had introduced the Extra Value Menu as way to repackage items between $1 and its Extra Value Meals in March 2012, but it did not produce the sales mix intended, and the company de-emphasized the menu in the chain’s advertising. The Extra Value Menu never went away, however, and marketing focus on the Dollar Menu increased.
“[McDonald’s] has been so focused on forcing franchisees to stick with the Dollar Menu, and it’s been a conflict for years,” Adams said. “The franchisees have gone off the Dollar Menu in various ways in various markets, so [Dollar Menu & More] is a concession by [the company] that it is going to have to fade away.”
Doing away with the Extra Value Menu and rolling it into a new-look Dollar Menu with two graduated price tiers, similar to Wendy’s moves earlier this year to tweak its Right Price Right Size value menu, is a way to alter a $1 value menu into something more workable, he said.
“That’s where Wendy’s got the jump on everybody, with the graduated value menu,” Adams said. “McDonald’s should have done this at the same time Wendy’s made their course correction.”
Without divulging specifics, McDonald’s said the Dollar Menu & More would include new single burgers, more chicken options, and double-patty or deluxe versions of current $1 sandwiches.
A report in Burger Business speculated that items reportedly tested around the country might be candidates for a wider Dollar Menu & More rollout, including a McDouble with bacon or new flavor combinations like Dijon-Swiss and Southwest; a double-patty Grilled Onion Cheddar burger; or Bacon Buffalo, Bacon Hot ‘n Spicy or Deluxe McChicken sandwiches.
“I suspect that might be where they’re going with this and that they’re trying to take pressure off the Dollar Menu,” said John Gordon, principal of San Diego-based, restaurant-focused Pacific Management Consulting Group. “If they can take $1 items and run them for $2, while only adding in 30 cents of food cost to differentiate the product a little bit [for example], theoretically you pick up [as much as] 70 cents in gross margin.”