McDonald's, the global fast-food chain, is introducing a new value meal deal priced at $5 in an attempt to attract customers and boost sales. The meal includes a McChicken or McDouble sandwich, four-piece chicken nuggets, fries, and a drink. The proposal for the new offering has been discussed between McDonald's corporate team and franchisees.
The move comes as low-income consumers have begun to pull back on spending at fast-food restaurants due to rising prices. Executives from various quick-service restaurant brands, including McDonald's, have noted this trend in their earnings calls. In the case of McDonald's, U.S. same-store sales slightly missed expectations in the first quarter.
McDonald's and franchisees are currently discussing details of the $5 value meal proposal. However, an initial proposal did not clear necessary hurdles and additional discussions are ongoing.
Franchisees in high labor cost areas, such as California, have expressed opposition to the deal due to their increased labor costs. McDonald's is reportedly seeking contributions from Coca-Cola to help mitigate these costs.
McDonald's has seen a significant increase in cash flow for U.S. franchisees since 2018, with an average of 50% growth and remaining cash flow positive in the first quarter.
The fast-food industry is facing challenges from consumers who are increasingly price-conscious due to inflation and economic uncertainty. McDonald's, like many other chains, is focusing on affordability to attract diners.
