McDonald’s will extend its $5 value meal past the planned expiration date in most U.S. markets after franchisees in those areas OK’d the plan, several sources said on Monday.
The $5 meal deal, which helped ignite a fast-food value war, was set to expire this week following a one-month run. McDonald’s owners in 93% of the company’s U.S. markets voted over the weekend to approve an extension.
As a result, most of the company’s local markets will extend the deal through August, or they have plans to continue voting on the issue, according to a system message seen by Restaurant Business. The deal gives customers a choice of a McChicken or a McDouble, along with a four-piece Chicken McNuggets, small fries and a small drink, for $5.
“This is a huge demonstration of our collective confidence in customer affordability remaining one of the strongest pillars of our plan right now, and doubling-down on our value commitment to be there for our customers at a time when they’re looking for us,” Myra Doria, national field president for McDonald’s USA, and Tariq Hassan, U.S. chief marketing and customer experience officer, said in a system message Monday, seen by Restaurant Business.
Yet the extension didn’t come without a bit of politicking. At least one market needed seven different votes before operators gave it the OK. Franchisees received calls urging them to vote in favor of the extension. “It was a full court press,” one franchisee said.
Still, the approval of a renewed offer surprised some franchisees and demonstrates the system’s willingness to push value even when it may cost them profit margins.
Doria and Hassan noted in their message that the meal deal is meeting the company’s objective of driving customers back into its restaurants.
The deal is also improving the company’s brand perception. And, they said, “the additional traffic creates greater opportunity for customers to experience full margin offerings on limited time offers” like the company’s Smokey BLT Quarter Pounder with Cheese.
“We must remember that driving guest counts ultimately propels our business and is the key to sustained growth,” Doria and Hassan said.
Indications had been somewhat mixed on the performance of the program. Data from the retail foot traffic tracking firm Placer.ai indicated that early days of the offer generated strong traffic for the chain.
But analysts and some franchisees had indicated otherwise. BTIG analyst Peter Saleh in a note last week indicated the deal was having “mixed results.”
Restaurants were generating transactions, but the number of “incremental” customers was fewer than expected.
In some markets, particularly those with higher concentrations of lower-income consumers, as much as 25% of transactions include the deal.
Customers in some markets, as Restaurant Business has reported, were also combining the $5 meal deal with a 20% offer on the company’s mobile app—so they could get the bargain for $4.
Some franchisees had likewise indicated that the deal has little to no profit, ultimately hurting store margins. This is especially true in some higher-cost locations, such as New York City.
Still, as Saleh noted, the deal “is an investment in McDonald’s value perception” as the company works to change a media narrative that has focused on its higher prices. The company’s average prices have increased 40% since 2019.
Customers on social media and elsewhere have been complaining vociferously about McDonald’s prices, sometimes fueled by questionable data on the extent of those price hikes.
With traffic falling, the company started working earlier this year to shift its marketing focus to more value. It convinced franchisees earlier this year to kick off the $5 meal deal, with some assistance from the beverage company Coca-Cola.
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