McDonald’s is working to introduce a $5 value meal


A McDonalds located on Santa Monica Blvd in Los Angeles, California, April 1, 2024.

Robert Gauthier | Los Angeles Times | Getty Images

McDonald’s is working to introduce a value meal in U.S. stores to help offset an increasingly challenging environment for consumers, two people familiar with the matter told CNBC.

The people said the $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. The value meal was first reported by Bloomberg News.

The potential new offering comes at a time when low-income consumers are beginning to pull back on spending, particularly at fast-food brands. Mentions of low-income consumers on company earnings calls are at their highest levels in nearly two years, according to data from Bank of America. Executives from McDonald’s to Wendy’s to Dave and Buster’s have all noted the restraint in spending. 

McDonald’s recently reported a mixed first quarter, with U.S. same-store sales slightly missing expectations. Higher prices helped grow average checks, but some consumers pulled back as a result of the steeper costs.

“Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending, which is putting pressure on the [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company’s earnings call on April 30.

He added that McDonald’s has to be “laser-focused” on affordability to attract diners.

On the call, Kempczinski said the company is working on a national value deal in the U.S., and the company’s Chief Financial Officer Ian Borden said the U.S. leadership team was working closely with owner-operators in this environment. McDonald’s corporate and franchisees, who run 95% of McDonald’s locations and weigh in on such offerings, are often at odds over promotions that could eat into owners’ profits.

An initial proposal by McDonald’s for the $5 value meal did not clear necessary hurdles, and additional details are now being discussed, according to a person familiar with the process. A second person said Coca-Cola added marketing funds to the equation to make the deal more appealing.

McDonald’s and Coca-Cola declined to comment to CNBC.

— CNBC’s Amelia Lucas contributed to this article.

Don’t miss these exclusives from CNBC PRO

Consumers exhibit restraint in restaurant spending



Source link