McDonald’s rolls out US$5 value meal, woos frugal customers

USA- Fast food giant McDonald’s revealed it would roll out its US$5 value meal from June 25 for a limited period at select outlets to woo frugal, low-income customers amid dwindling consumer spending. 

The value deal includes a McChicken sandwich or McDouble, small fries, four-piece chicken McNuggets, and a small soft drink of the customer’s choice. 

However, the fast food giant revealed that the meal may be priced at US$6 in certain outlets in California, Alaska, Hawaii, Guam, New York, and Nevada. The company also announced it will bring back ‘Free Fries Friday,’ which will give customers a free medium fry with every US$1 purchase for the rest of 2024. 

These promotional strategies are part of measures taken by fast food chains in the US affected by high inflation that translated to changes in consumer spending. Disposable income among low-income customers in the US continues to decline while prices in outlets continues to rise. Frugal spending by customers significantly affected McDonald’s and KFC’s parent Yum! Company in Q1 2024. 

Kareem Nassar, CEO of American QSR Brands, described the current state of the fast food industry by saying, “Typically, the value proposition is to get customers into the restaurant that haven’t been there in a while or don’t frequent as often due to the fact that they might feel some prices are too high on some items.” 

McDonald’s missed quarterly sales for the reported quarter for the first time in two years, with sales growth declining by 1.9% against estimates of 2.35%. Same-store sales for KFC’s Yum! Brands fell 3% in the reported quarter against analyst predictions of 0.04% growth. 

Players continue to implement value deal strategies as customers are on the lookout for affordable restaurant options. 

Domino’s Pizza exceeded analysts expectations for Q1 2024 as customers in the US took advantage of the value deal offered via the company’s loyalty program. Same store sales for the pizza chain increased by 5.6% within the reported quarter. 

Rival Burger King is also exploring a US$5 value pack as a means of responding to market pressures from customers who are increasingly sensitive to pricing.