A McDonald’s on Santa Monica Blvd in Los Angeles, California, April 1, 2024.
Robert Gauthier | Los Angeles Times | Getty Images
MC Donalds is working to introduce a value meal in U.S. stores to offset an increasingly challenging environment for consumers, two people familiar with the matter told CNBC.
People said the $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. Bloomberg News first reported on the price-performance ratio.
The potential new offering comes at a time when low-income consumers are beginning to cut back on spending, particularly on fast food brands. Mentions of low-income consumers on company conference calls are at their highest level in nearly two years, according to data from Bank of America. Executives from McDonald’s to Wendy’s To Dave and Buster Everyone has noted the restraint in spending.
McDonald’s recently reported a mixed first quarter, with U.S. same-store sales falling slightly short of expectations. Higher prices helped average checks rise, but some consumers pulled back because of the increased costs.
“Consumers continue to be more selective with every dollar they spend as they face higher prices on their everyday spending, putting pressure on consumers [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company’s April 30 earnings call.
He added that McDonald’s needs to be “laser-focused” on affordability to attract diners.
On the call, Kempczinski said the company is working on a national value-added business in the U.S., and the company’s chief financial officer, Ian Borden, said the U.S. leadership team is working closely with owners and operators in this environment. McDonald’s companies and franchisees, which operate 95% of McDonald’s stores and participate in such promotions, often argue over promotions that could reduce the owners’ profits.
An initial proposal from McDonald’s for the $5 meal failed to clear necessary hurdles, and further details are being discussed, according to a person familiar with the process. a second person said Coke added marketing tools to the equation to make the business more attractive.
McDonald’s and Coca-Cola declined to comment to CNBC.
—CNBC’s Amelia Lucas contributed to this article.
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2024-05-10 20:20:33
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