McDonald’s Suffers Financially, Examining New Offer To Regain Clientele

McDonald’s is thinking of enticing patrons back to its eateries with a new meal deal that won’t break the bank.

Many people, including businesses, deal with inflation nationwide. One of the most well-known fast-food restaurants in the world is struggling and made less money this quarter than the previous. How then are they going to recover? The business has a strategy.

Americans are cutting back on fast food as a result of rising expenses that are negatively impacting their finances nationwide. This occurs along with price increases by large chains, such as McDonald’s, to cover rising labor and material costs.

McDonald’s reported a $6.17B profit as of March 2024, a decrease from $6.41B in December 2023. Their revenue in September 2023 was $6.69 billion.

The brand is looking for strategies to draw in new customers as profit margins continue to decline. To introduce a new low-cost meal, executives at McDonald’s corporate headquarters are now in discussions with franchise owners. This is in response to reports from McDonald’s executives that fewer people are dining at their locations.

In an effort to entice customers back into its restaurants, McDonald’s is reportedly thinking of introducing a $5 lunch option to its menus nationwide, according to CBS News.

The main course of the meal, if franchise owners approve, would be a choice between a McChicken, a McDouble, or four pieces of chicken nuggets, along with fries and a drink.

McDonald’s CEO Chris Kempczinski stated during the company’s April 30 results call, “Consumers continue to be even more discriminating with every dollar that they spend as they face elevated prices in their day-to-day spending, which is putting pressure on the industry.”

“It’s imperative that we continue to keep affordability at the forefront for our customers,” he stated.

“About 25% of people who make under $50,000 are cutting back on fast food, pointing to cost as a concern, according to a January poll by consulting firm Revenue Management Solutions,” the finance website FinanceBuzz writes, citing CBS.

According to the analysis, McDonald’s increased its menu pricing the highest between 2014 and 2024.

The majority of McDonald’s patrons are middle-class and lower-class individuals, not high-income ones, as analyst and president of Kalinowski Equity Research Mark Kalinowski stated to CBS MoneyWatch. “They need to be cautious with their spending, and that’s what you’re seeing right now.”

Sales at fast-food restaurants like Taco Bell and McDonald’s appeared to be suffering from skyrocketing pricing. The last year’s same-store sales have decreased, according to recent earnings reports.

Kevin Roberts told CBS News, “The whole conceit was that you were getting some OK-level food for a low price and you could get it quick.” “I can no longer justify the cost. Forget it—I’m heading home if I have to spend $15 for a McDonald’s-caliber burger, fries, and drink.”

The 38-year-old told the publication that he can recall a time when he could purchase a drink, fries, and a bacon cheeseburger from Five Guys for $10. The bacon cheeseburger on its own now costs more than $10. A bacon cheeseburger costs $12.99 in Columbus, Ohio. In New York City, it costs $13.09; in Los Angeles, it costs $14.39.

He only now consumes fast food “as a rare treat.”

He told the news site, “Nothing has made me cook at home more than the prices of fast food.”

McDonald’s is not the only fast food company raising costs; according to FinanceBuzz, Popeye’s, Jimmy John’s, and Subway all saw increases in food prices between 2014 and 2024 of 86%, 62%, and 39%, respectively.

According to the finance website, Jimmy John’s eight-inch club tuna increased in price from $5.75 to $9.10, and Popeyes’ two-piece chicken combo went from $6.49 to $11.39.

This is a result of rising minimum wages across the US. According to CBS, “22 states in the United States increased their minimum wages in January, but the federal minimum wage stays at $7.25 per hour. A new law passed last fall requires fast-food restaurants with 60 or more sites nationally to pay their employees a minimum wage of $20 per hour in California.”