McDonald’s is implementing a new pricing strategy to attract customers concerned about rising fast-food costs. The company’s CEO, Chris Kempczinski, acknowledged that many consumers, especially those with household incomes under $45,000, no longer view McDonald’s as affordable.
Starting September 8th, McDonald’s introduced “Extra Value Meals,” offering discounted combos featuring popular menu items such as the Big Mac, Egg McMuffin, and McCrispy sandwich, paired with medium fries or hash browns and a drink. While prices vary by location, the company claims these meals will be 15% cheaper than ordering items individually.
To further incentivize purchases, McDonald’s launched a limited-time promotion offering an $8 Big Mac meal and a $5 Sausage McMuffin meal in most of the country. Customers in California, Alaska, Hawaii, and Guam will pay a slightly higher price.
The price adjustments follow a period of declining customer visits. McDonald’s reported a double-digit drop in lower-income customer traffic during the second quarter. The company’s same-store sales, while showing a 2.5% increase, were primarily driven by higher prices rather than increased customer traffic.
Kempczinski noted that combo meals exceeding $10 negatively impact value perception, highlighting the need for price corrections. The company faced challenges due to price variations across locations, with some instances, like a viral social media post about an $18 Big Mac meal in Connecticut, prompting the company to clarify that franchisees set prices for most U.S. restaurants.
McDonald’s attributes the price increases, averaging 40% between 2019 and 2024, to rising labor, packaging, and food costs. However, the company had already introduced other value-oriented promotions, including a $5 meal deal and a “$1 with purchase” offer, which remain available alongside the new “Extra Value Menu.”
The move by McDonald’s comes as the entire fast-food industry grapples with lower customer traffic. Revenue Management Solutions reported a nearly 1% decline in overall U.S. fast-food customer traffic during the second quarter. The consulting firm also noted that price increases slowed compared to previous quarters, suggesting an industry-wide trend towards increased promotional offerings. Competitors like Domino’s have also launched value promotions, such as their “Best Deal Ever” offering. The overall market trend suggests that value-driven strategies are becoming increasingly critical for fast-food chains to maintain customer traffic and market share.
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