Business World

McDonald’s new ‘dollar’ menu to intensify price war in 2018

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McDonald’s Corp. will introduce new menus with $1, $2 and $3 items in early January as restaurant­s battle to win US customers who have come to expect deals on fast food.

NEW YORK — McDonald’s Corp. said on Monday it would introduce new menus with $1, $2 and $3 items in early January as restaurant­s battle to win US customers who have come to expect deals on fastfood.

McDonald’s is in a price war with rivals ranging from Yum Brands, Inc.’s Taco Bell to Dunkin’ Brands Group, Inc.

McDonald’s dropped its popular “Dollar Menu” in 2013 after franchisee­s groused that selling items like a double cheeseburg­er for $ 1 cut into profits. The replacemen­t “Dollar Menu & More” had higher prices, but failed to draw more customers despite heavy marketing.

The new dollar menus, set to debut on Jan. 4, include any size soft drinks and cheeseburg­ers for $1, small McCafe drinks and bacon McDoubles for $2 and Happy Meals and triple cheeseburg­ers for $3, McDonald’s said.

They will supplement McDonald’s current value offers such as McPick 2 where customers can pick two items from a list for $5 — including Big Macs, fish filets and 10-piece chicken nuggets.

All of the value menus are designed to protect franchisee margins, the company said.

“You always have to have value as part of the equation,” Chris Kempczinsk­i, president of McDonald’s USA, said in an interview.

McDonald’s executives in October said almost all of its US operators support its ongoing turnaround plan that includes the new value menus.

McDonald’s recent US recovery has been driven largely by its value offers, said Bob Goldin, partner and cofounder of food industry strategy firm Pentallect, Inc.

“They are really killing it with dollar beverages and the McPick 2,” said Mr. Goldin, who added that value remains a key driver of traffic to fast-food restaurant­s — even as the economy improves and diners have more disposable income.

Elsewhere, Taco Bell regularly rotates the roughly 20 items on its $1 value menu. Subway, which made a huge splash a few years ago with its “$5 foot-long” special, is now offering a variety of six-inch sandwiches for $2.99 each.

Dunkin’ Donuts also is brewing up more value offers after franchisee­s warmed to the idea of using deals in their fight to win breakfast.

The strategy is not without risks, said Mr. Goldin, who noted that rising food and labor costs could squeeze franchisee­s who bear the brunt of such cost increases.

“They are really stuck in a value trap,” Mr. Goldin said. “There is going to be tremendous pressure to raise prices.” —

 ??  ?? PERFORMERS BEAT drums during the opening ceremony of the first McDonald’s fastfood chain restaurant in the capital Hanoi on Dec. 2. Global burger behemoth McDonald’s opened its first branch in the historic heart of communist Hanoi. The restaurant is...
PERFORMERS BEAT drums during the opening ceremony of the first McDonald’s fastfood chain restaurant in the capital Hanoi on Dec. 2. Global burger behemoth McDonald’s opened its first branch in the historic heart of communist Hanoi. The restaurant is...

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