McDonald's confirms $5 value meal in move to lure back 'low income' customers

McDonald's has confirmed that they will add a $5 combo value meal deal to their menus this summer in an attempt to win back lower-income customers who had reduced their spending at the fast food outlet. McDonald's , based in Chicago , said they will introduce the month-long promotion, starting on June 25, that will allow customers to choose from four menu items as part of the deal.

Either a McDouble or a McChicken sandwich can be accompanied by a drink, small fries, and Chicken McNuggets, all for the bargain price of $5. The iconic fast food chain had come under fire for its rising prices, with Big Mac meals costing as much as $18 in some locations around the United States.

The cost of eggs and other items prompted McDonald's, along with other fast food companies, to raise their prices. Prices also shot up in California , a state in which there is a $20 per hour minimum wage for fast food staff.

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A McDonald's spokesperson said the introduction of the deal is part of an overall strategy to offer value across the nation. “That’s been true since our very beginning and never more important than it is today,” the company said in a statement, as reported by The Wall Street Journal.

Due to the cost of living crisis, McDonald's, as well as other corporate giants like Starbucks, has seen much of their lower-income customer base turning away from the brand, instead eating at home due to the high prices of menu items. Last month, the fast food giant said that its sales had slowed for the fourth quarter in a row.

McDonald's has missed its quarterly profit estimates for the first time in two years. This is attributable to both lower-income customers being more cautious in spending their money and the conflicts in the Middle East hitting international sales.

“I think it’s important to recognize that all income cohorts are seeking value,” CEO Chris Kempczinski said. On Wednesday, shares in the company rose 0.8%.

McDonald's said that customers were “more discriminating with every dollar they spend," as global comparable sales growth was at 1.9 percent, compared to a forecast of 2.35 percent, according to LSEG data. “Consumer is certainly being very discriminating in how they spend their dollar. I think it’s important to recognize that all income cohorts are seeking value,” CEO Kempczinski said on a post-earnings call.

Conversely, brands such as Burger King-owner Restaurant Brands exceeded their quarterly forecast. Similarly, Domino’s Pizza benefited from offers on pizzas, justifying their focus on offering value.

The first-quarter same-store sales grew 2.5 percent at McDonald's in the United States. This is significantly lower than the 12.6 percent growth of last year and was also below the forecasted estimates of a 2.55 percent growth.

International licensees made up ten percent of McDonald's revenue in 2023 and these figures declined by 0.2 percent, despite positive trends in Japan, Latin America, and Europe.

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