McDonald’s Corp announced it would introduce a new lineup of low-cost foods in early January nationwide as restaurants strive to win U.S. customers who have come to expect deals on fast food. The new menu is called the $1-$2-$3 Dollar Menu, which consists of a wider variety of items covering the three different price points.
The world’s biggest hamburger chain is in a price war with competitors ranging from Yum Brands Inc.’s Taco Bell to Dunkin’ Brands Group Inc.
McDonald’s removed its popular “Dollar Menu” in 2013 after franchisees nagged that selling food like a double cheeseburger for $1 cut into profits. It was then replaced by “Dollar Menu and More” but had higher prices, and failed to attract more customers despite heavy marketing.
The new dollar menus, which is slated to launch on January 4, comprise any size soft drinks and cheeseburgers for $1, small McCafe drinks and bacon McDoubles for $2, and Happy Meals and triple cheeseburgers for $3, the company said.
They will be added to McDonald’s current value offers such as McPick 2 where customers can choose two items from a list for $5, including Big Macs, fish filets, and 10-piece chicken nuggets.
The company said that all of the value meals are created to safeguard franchisee margins.
“You always have to have value as part of the equation,” Chris Kempczinski, president of McDonald’s U.S.A., said in a statement.
In October, the company’s executives said almost all of its U.S. operators give their support to its current change plan which includes the new value menus.
The fast-food chain’s latest U.S. revival has been bolstered widely by its value offers, said Bob Goldin, partner
“They are really killing it with dollar beverages and the McPick 2,” Goldin said, adding that value remains an important factor of traffic to fast-food restaurants, even as the economy grows and diners have more disposable wages.
Meanwhile, Taco Bell regularly interchanges the around 20 items on its $1 value meal. Subway, which became a hit to customers a few years ago with its $5 foot-long” special, is now providing different six-inch sandwiches for $2.99 each.
Moreover, Dunkin’ Donuts also is preparing more value offers after franchisees take a liking to the idea of using deals in their battle to win breakfast.
Goldin said the strategy is not without risks. He said that increasing food and labor costs congest franchisees who endure the burden of rising costs.
“They are really stuck in a value trap,” Goldin said. “There is going to be tremendous pressure to raise prices.”
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