In February, McDonald’s CEO Chris Kempczinski said the battleground in the quick-service category is with the low-income consumer. We now know his company’s weapon of choice – a $5 Meal Deal. In a surprise to probably no one, McDonald’s today confirmed that it is, indeed, launching the deal after weeks of speculation. The nationwide offer kicks off June 25 and includes the choice of a McDouble or McChicken sandwich, small fries, a four-piece Chicken McNuggets, and a small soft drink. It is available for a limited time.
“We heard our fans loud and clear – they’re looking for even more great value from us, and this summer that’s exactly what they’ll get,” Joe Erlinger, president of McDonald’s USA, said in a statement. “Value has always been part of our DNA. We’re focused on living up to that legacy and offering delicious, affordable options customers can enjoy any time they walk through our doors, go through our drive-thru or place an order through our app.”
The $5 meal comes on the heels of a letter written by Erlinger addressed to McDonald’s customers reiterating the company’s “laser-focus on value and affordability.” The letter mostly focused, however, on what he called inaccurate information proliferating via social media and other reports claiming the chain’s prices have risen 100% in the past several years. On the contrary, he said, the cost of a Big Mac is up 21% since 2019.
McDonald’s sharpened focus on value comes as the company has lost customers in the past two quarters, particularly lower-income consumers with whom the company over-indexes. As such, this $5 Meal Deal isn’t the only page in the company’s playbook to win back those customers. McDonald’s is also hosting “Free Fries Fridays” every Friday nationwide through the end of the year. The campaign includes a free medium fry with any $1 minimum purchase exclusively through the McDonald’s app. Further, on July 13 – National French Fry Day – app users can get free fries of any size, no purchase necessary.
The company also notes that its app will include local offerings all summer, from buy-one-get-one deals to discounts on beverages.
“As small business owners, it’s our responsibility to deliver great value to our local communities when they need it most. The $5 Meal Deal is the perfect complement to the everyday local deals customers can find in store and on the app, like the 25 percent off any purchase of $10 or more deal that I'm offering at my restaurants in Savannah, Georgia,” John Palmaccio, McDonald’s owner/operator and Operator’s National Advertising Fund Chair, said in a statement.
There is likely more to come as well. During McDonald’s Q1 earnings call, Kempczinski said, “The construct we see as our successful playbook is good entry level offers, meal deals, and offering value specific to breakfast.”
Notably, McDonald’s $5 Meal Deal comes as the gap between restaurant prices and grocery prices remains wide. Restaurant prices in May were up 4% year-over-year. By comparison, the food-at-home index (grocery prices) was up 1% in May. This marked the 15th month in a row in which restaurant pricing outpaced grocery pricing. The disparity has led to a -2.1% dip in traffic in May, according to Revenue Management Solutions data. Further, 78% of consumers now consider fast food to be a “luxury,” according to Lending Tree data.
As such, McDonald’s isn’t the only QSR embracing value. Also today, for instance, Wendy’s announced it is offering customers a free small Frosty with the purchase of a Biggie Bag exclusively in the app. Burger King has invested millions to drive awareness of its $5 Duos, $5 Your Way meals, and $2.99 wraps, while Jack in the Box just released a Munchies Menu, with offerings under $4.
Contact Alicia Kelso at [email protected]