McDonald’s Takes Economical Hit, Considering New Deal To Win Back Customers

McDonald's is considering coaxing customers back to its restaurants by offering a new food deal that won't take a hit on your wallet.

Inflation across the country is a struggle for many, including businesses. One of the most popular fast food chains worldwide is taking a hit, bringing in less profit than last quarter. So how are they going to bounce back? The company has a plan.

Rising costs are affecting wallets across the United States, resulting in Americans cutting back on fast food. This comes as major chains, like McDonald's, have raised prices to offset increased labor and product expenses.

As of March 2024, McDonald's had a profit of $6.17B, which is down from its December 2023 profit of $6.41B. In September 2023, they brought in $6.69B.

As profit continues to decrease, the brand is trying to find ways to attract customers back. Leaders at McDonald's corporate offices are currently in talks with franchise owners to launch a new budget meal. This comes after McDonald's executives reported a decrease in the number of customers dining in at its restaurants.

According to CBS News, McDonald's is considering adding a $5 meal option to its menus across the U.S. to help drive consumers back into its establishments.

If franchise owners agree, the meal would include a choice of either a McChicken, a McDouble, or four-piece chicken nuggets as its main dish, as well as fries and a drink.

At the April 30 earnings call, McDonald's CEO Chris Kempczinski said, "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 added.

According to CBS, the finance website FinanceBuzz reports, "about 25% of people who make under $50,000 are cutting back on fast food, pointing to cost as a concern, a January poll by consulting firm Revenue Management Solutions found."

The report also finds that McDonald's is the business that raised its menu prices the most between 2014 and 2024.

"When you look at McDonald's, they're not getting a majority of high-income customers — the middle- and lower-income class are the bulk of their business," analyst and president of Kalinowski Equity Research Mark Kalinowski told CBS MoneyWatch. "They need to be cautious with their spending, and that's what you're seeing right now."

Soaring prices at fast-food chains like McDonald's and Taco Bell seem to be taking a bite out of sales. Recent earnings reports show a decline in same-store sales over the past year.

"The whole conceit was that you were getting some OK-level of food for a low price and you could get it quick," Kevin Roberts told CBS News. "Now I can't justify the expense. If I'm paying $15 for a burger and fry and drink and it's McDonald's quality, forget about it — I'm going home."

The 38-year-old told the outlet that he remembers when he could get a bacon cheeseburger, fries, and a drink from Five Guys for $10. Now, the bacon cheeseburger alone costs over $10. In Columbus, Ohio, it costs $12.99 for a bacon cheeseburger. It costs $13.09 in New York City and $14.39 in Los Angeles.

Now, he only gets fast food "as a rare treat."

"Nothing has made me cook at home more than fast-food prices," he told the news outlet.

McDonald's isn't the only fast food chain to increase prices as FinanceBuzz reports that, between 2014 and 2024, Popeye's, Jimmy John's, and Subway's food prices climbed 86%, 62%, and 39%, respectively.

The finance website states that the price of a two-piece chicken combo at Popeyes went from $6.49 to $11.39, and Jimmy John's eight-inch club tuna jumped from $5.75 to $9.10.

This is due to minimum wages increase across the United States. Per CBS, "Across the U.S., 22 states raised their minimum wages in January, although the federal baseline pay remains stuck at $7.25 an hour. In California, fast-food chains with 60 or more locations nationwide are now required to pay their workers a minimum wage of $20 an hour following passage of a new law last fall."