Dive Brief:
- McDonald’s will continue its $5 Meal Deal into December, the chain announced Thursday. The brand will also continue its Free Fry Friday promotion, offering free medium fries with any $1 minimum purchase on Fridays, through the end of 2024.
- The chain announced three other national promotions for the late summer and fall: a 50-cent double cheeseburger on Sept. 18, $2 McCrispy sandwich on Nov. 8, and $1 10-piece McNuggets between Nov. 4 and Dec. 2. The nuggets offer is valid once a week.
- Traffic and same-store sales have remained troubled for many QSR brands, and restaurants are expanding or extending value offerings in response. KFC, for instance, added new items to its $4.99 meal deal, which was already slated to run through the end of the year, and Burger King has reportedly pushed its meal deal into October.
Dive Insight:
McDonald’s, a relative latecomer to the 2024 value wars, saw its comparable sales and traffic fall in Q2. It’s unclear the extent to which the $5 Meal Deal, which launched with only a few days left in Q2, has impacted traffic. The promotion’s full impact to the chain won’t be clear until McDonald’s reports its Q3 results in the fall.
However, the extension of the promotion indicates McDonald’s feels it's necessary to sustain competition with its rivals. McDonald’s U.S. President Joe Erlinger said the chain had worked with its franchisee base on the value offering.
“Together with our franchisees, we're committed to keeping our prices as affordable as possible, which is why we're doubling down with even more ways to save,” Erlinger said.
Restaurant prices have continued to increase, recent inflation data from the Bureau of Labor Statistics shows, with food away from home costs up 4% year-over-year in August, compared to 0.9% for food at home. Grocery prices were flat month-to-month in August, while restaurant prices increased 0.3%. Continued divergence in pricing between restaurants and grocery stores will depress consumer traffic in the long run. Personal disposable income did increase 0.1% in July, according to the Bureau of Economic Analysis, but slower than personal consumption expenditure, which rose 0.4% in constant dollars.
The $5 Meal Deal could prove attractive to cash-strapped consumers. To determine the relative value of the deal, Restaurant Dive compared the price of its meal deal to the price of ordering each individual item at one suburban McDonald’s in the Northeast, chosen arbitrarily. In that store’s market, as in some others, the McDouble version of the meal deal is $6. The McDouble version is $3.86 cheaper than the individual items, a 39% discount rate; the McChicken version is $4.86 cheaper, or a 49% discount rate.
In addition to its other fall LTOs, McDonald’s is offering local deals, according to the press release. Its initial strategy in the 2024 value war focused on such local deals, and the brand was caught flat footed by competitors, which rolled out meal deals at the start of the year. Taco Bell, for example, added six items to its value menu in early January, one of 2024’s first value offerings. McDonald’s $5 Meal Deal made its debut in late June.
