McDonald’s is gearing up for a battle in the fast-food industry, and their weapon of choice? The value meal. That’s right, the iconic burger chain is rolling out a new $5 meal deal in an effort to win back budget-conscious customers who have been cutting back on their fast-food spending.
Starting June 25, McDonald’s will launch a marketing campaign highlighting this $5 meal deal, raising the stakes in the competitive landscape of U.S. restaurants striving to attract diners weary from inflation.
Joe Erlinger, president of McDonald’s U.S., emphasized their commitment to winning the “value war” in a recent interview with Bloomberg News. He believes that McDonald’s vast scale and marketing power, as a $130 billion company, give it an edge over smaller competitors. The new $5 deal includes a McDouble or McChicken sandwich, small fries, four-piece chicken nuggets, and a small soft drink.
But the competition isn’t taking this lying down. Burger King’s U.S. president announced plans to launch their own $5 value meal ahead of McDonald’s. Wendy’s introduced a $3 breakfast offer and mocked its competitors on social media. Even Starbucks is entering the fray with a $6 breakfast sandwich and coffee combo.
Despite the competitive jabs, Erlinger remains focused. He points out that the incremental cost of adding fries and a drink to a sandwich is minimal, thanks to McDonald’s scale.
However, not all McDonald’s franchisees are thrilled. Many worry that customers might trade down from pricier options, like the $9 Big Mac combo, which could hurt profits. An independent franchisee group expressed concerns about the sustainability of such discounts, highlighting the challenge of maintaining profitability with significant price cuts.
Interestingly, a local $5 promotion in upstate New York has performed well, attracting lower-income consumers and boosting sales among wealthier customers who buy more than just the $5 meal. This success has encouraged McDonald’s to extend the promotion nationally for four weeks, with longer runs in markets like Dallas and Las Vegas.
For McDonald’s, this promotion is more than just a sales driver. It’s also an effort to counter the perception that the chain has become too expensive. Recent social media buzz about an $18 Big Mac combo in Connecticut has fueled this notion, despite being an outlier among the company’s 13,700 locations.
Prices at McDonald’s have indeed risen by about 40% since 2019 to cover increasing costs, Erlinger acknowledged in a May blog post. This has affected customers like Dylan Covington from Fort Wayne, Indiana, who used to be a regular but now only visits McDonald’s occasionally due to the higher prices.
As prices rise nationwide, dining out has become less frequent for many Americans. Even fast food is increasingly seen as a special treat. Early this year, competitors like Arby’s and White Castle introduced their own value meals, putting pressure on McDonald’s to respond.
Bank of America analyst Sara Senatore noted that McDonald’s appeared slow to address the value segment but is now making significant moves to attract discerning customers. Franchisees, who operate 95% of McDonald’s U.S. locations, initially rejected the $5 promotion over profit concerns but later agreed, partly due to additional support from Coca-Cola.
McDonald’s is also leveraging its app to offer promotions like free fries, encouraging more frequent orders and larger purchases. The $5 meal promotion might not yield immediate results, but McDonald’s has a history of evolving its value menu to drive strong sales over time.
Looking ahead, McDonald’s plans to remain competitive on value and affordability. Customers aren’t clamoring for new products or innovative twists on existing ones—they want good deals. And McDonald’s is prepared to meet that demand head-on.
