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McDonald’s to Launch $5 Meal Deal to Lure Diners Back


From Newsmax

McDonald’s is preparing to launch a $5 meal deal at its U.S. restaurants to lure more inflation-hit customers back to its chains, Bloomberg reports, citing a person familiar with the matter.

The deal could include a McChicken or a McDouble, along with fries and a drink, the report said.

On the company’s first-quarter earnings call CEO Chris Kempczinski said McDonald’s will now be “laser-focused on affordability” to attract penny-pinching customers back. The majority of McDonald’s customers are low income.

“What we don’t have in the U.S. right now is a national value platform,” Kempczinski said.

Earlier this year, McDonald’s franchisees, which run 95% of McDonald’s U.S. stores, rejected a proposed four-week inexpensive promo for customers, citing worries about profitability.

Franchisees pay into an advertising fund and are allowed to weigh in on major marketing campaigns. This included the successful Grimace Shake, which went viral.

California franchisees were especially worried about their bottom lines because the state’s minimum wage recently jumped 25% to $20 a hour.

To guarantee the $5 deal, McDonald’s partnered with Coca-Cola to cushion the profitability for franchisees, a source said.

“McDonald’s has had such strong sales in recent years that they didn’t really need” a special promotion, said Mark Kalinowski, CEO of Kalinowski Equity Research. “Now that the consumer has shown by action that they’re demanding value more than they were even six months ago, McDonald’s is changing with the times.”

Global fast food chains like McDonald’s and Starbucks have seen lower-income customers opting to eat more meals at home amid a cost-of-living crisis, forcing the companies to offer steeper promotions to attract them to their outlets.

The burger giant, which has a higher exposure to the lower-income customers, saw its global sales growth slowing for the fourth straight quarter, pushing it to lean on improving offers on its meals.

“I think it’s important to recognize that all income cohorts are seeking value,” Kempczinski said on a post-earnings call last month.

Shares of the company were up 2.5% in afternoon trading after the news.

McDonald’s did not immediately respond to a Reuters request for comment.

© 2024 Thomson/Reuters. All rights reserved.

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