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McDonald's to update its $5 value meal deal after it fails to boost customers
McDonald’s $5 value meal has not led to a boost in customers, according to fast food experts.
Analyst Peter Saleh, whose company BTIG monitor visitor numbers at fast food chains, now thinks the company will have to revise the strategy - and extend the deal.
‘It's just too early to know if this $5 Meal deal will drive profitable incremental traffic," he said in a note to investors.
But he said the offer is aimed at changing Americans’ perception of McDonald’s as being expensive - as much as it is luring in more customers.
As a result, he expects the deal, which launched June 25, will be extended until September to give more time for that message to get through - and better judge its effect on customer numbers.
It is understood this time extension is being considered by McDonald's. Even if they do not extend it nationally, local franchises are being encouraged to do so.
McDonald's deal went on sale on June 25 for a month
And, already, franchise owners in areas including Denver, Dallas, Phoenix and Las Vegas have already voted to extend it, McDonald's president Joe Erlinger said in a recent interview.
Saleh, in the note seen by Seeking Alpha, also said he expects other offers from McDonald's - including free fries on a Friday - will continue through the summer, as rivals like Burger King and Wendy’s roll out more and more deals.
McDonald's $5 deal - including either a McChicken or McDouble, four-piece chicken nuggets, fries and a drink - was rolled out to offer 'meaningful value' to customers.
When news of the meal first emerged in May, it was thought that not every restaurant would offer the deal - with those that have higher labor and rent costs opting out.
But McDonald's found a solution. It is allowing managers in pricier states - Alaska, California, Guam, Hawaii, Nevada, Manhattan in New York and Washington - the option to charge $6.
The promotion was slated to last for for roughly a month.
McDonald's made an eye-watering $14.5 billion profit last year.
Chains are reeling from falling customer numbers as Americans fed up with two years of price rises stay away - so are rolling out offers.
Burger King's $5 Your Way Meal - which is very similar to McDonald's - was the first to hit restaurants in June.
Customers get a choice of one of three sandwiches - a Whopper Jr, a Bacon Cheeseburger or Chicken Jr - plus four chicken nuggets, fries and a soft drink.
Wendy's has a $3 breakfast offer and also a four-item $5 meal similar to McDonald's and BK's.
Starbucks also made a surprise entry into the value war with a coffee and food breakfast combo from $5.
McDonald's is trying desperately to battle perceptions that it has raised prices so much it is no longer good value.
In fact, last month Joe Erlinger, president of McDonald's USA, wrote an unprecedented open letter to customers claiming its price rises aren't as bad as some media is reporting.
In it, he said prices have 'only' gone up 40 percent across its 14,000 US restaurants since before the pandemic.
When contacted by DailyMail.com, McDonald's said it is committed to offering customers great value.
McDonald's president Joe Erlinger has hinted that the $5 meal deal could be extended
McDonald's is not the only fast food giant to roll out a deal. Chains - reeling from falling customer numbers as Americans fed up with two years of price rises stay away - are rolling out offers.
Burger King's $5 Your Way Meal - which is very similar to McDonald's - was the first to hit restaurants in June.
Customers get a choice of one of three sandwiches - a Whopper Jr, a Bacon Cheeseburger or Chicken Jr - plus four chicken nuggets, fries and a soft drink.
Wendy's has a $3 breakfast offer and also a four-item $5 meal similar to McDonald's and BK's.
Starbucks also made a surprise entry into the value war with a coffee and food breakfast combo from $5.