Archive · 25 Jul 2025
McDonald’s Battles Inflation, Seeks to Regain Value Appeal
McDonald's, known for being fast and cheap, is losing its value appeal as prices have gone up.
They're trying to fix this by offering deals like a $5 meal and testing even cheaper options.
However, franchisees (the owners of the restaurants) are worried these deals will hurt their profits.
It's a tricky situation where McDonald's wants to attract customers with low prices, but the people running the restaurants are dealing with higher costs for ingredients and labor.
They're trying to find the right balance to keep customers happy and still make money.
McDonald's is working to regain its value edge after seeing a decline in customer perception due to rising prices.
The company is implementing new value deals, such as a $5 meal deal, and testing other affordable options like a $3-and-less menu.
Franchisees and corporate leadership are at odds over pricing strategies, impacting profit margins and deal implementation.
McDonald's is facing competition from fast-food rivals and higher-ticket restaurants as well as consumers' own kitchens.
The company is adapting by leveraging its consumer science expertise, rolling out new menu items, and working with suppliers to manage costs.
- Who
- McDonald's, its franchisees, and its customers.
- What
- McDonald's is working to regain its value edge by offering new deals and adapting to rising costs and competition.
- When
- McDonald's has been implementing new value strategies since the middle of last year.
- Where
- The events primarily concern McDonald's operations in the U.S.
- Why
- McDonald's is responding to customer concerns about rising prices and increased competition in the fast-food industry.
McDonald's Corporate Perspective
Franchisee Perspective
Pricing Strategies
McDonald's Corporate Perspective
Emphasizes the need for beefier deals to draw in customers and address inflation fatigue.
Franchisee Perspective
Franchisees are concerned that the deals hurt profits.
- Decline in value perception
- Lowest in a decade (UBS Evidence Lab survey)
- Big Mac meal price increase (2019-2024)
- 27%
- $5 meal deal
- Included McDouble or McChicken, small fries, small soft drink, and Chicken McNuggets
- Franchisee Locations
- 95% of roughly 13,500 in the U.S.
- Labor and goods cost increase
- Restaurant worker salaries up 40% since 2019, food/paper up 35%