McDonald’s Is Working On A New Value Menu To Appeal To The Masses

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McDonald’s is trying something different, according to one of the company’s top executives.

Granted, the fast-food chain isn’t struggling, at least on a surface level; with more than 36,000 locations in over 100 countries, McDonald’s sells plenty of burgers.

However, over the last few years, the company has been dogged by reports of flagging sales.

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“The reality is, our recent performance has been poor. The numbers don’t lie,” Chief Executive Steve Easterbrook said in 2015. At that time, revenue had fallen by 11 percent and profit by 30 percent over the previous quarter. The company was losing market share, and Easterbrook, who describes himself as an “insider activist,” saw an opportunity for change.

“We’re not on our game,” said Easterbrook at the time, adding that “the world has moved faster outside the business than inside.”

This year, the company has shown a turnaround, exceeding revenue expectations by bringing in $5.68 billion in its first quarter. Sales were especially strong in the United States.

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“There’s a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers.” Easterbrook said.

But as Easterbook recently told investors, further growth will require raising the company’s reputation. That means introducing fancier foods—take for example the “Signature Crafted” sandwiches, which recently drew ridicule on social media for including millennial-friendly ingredients like kale.

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McDonald’s

But Easterbrook also said that while the restaurant chain is “not obsessed with winning on value,” they do intend to remain competitive on that front by introducing a new version of the Dollar Menu—and that’s where things get a little tricky.

Back in January 2016, McDonald’s replaced its famous Dollar Menu with a “McPick 2” menu.

That menu allowed customers to pick two items from a limited list for $2. At the time, the chain’s executives claimed that the McPick 2 added a value-oriented option to the lower end of its restaurants’ menus.

“Customers are looking for choice and flexibility,” said Deborah Wahl, senior vice president of marketing for the U.S. arm of McDonald’s, in 2016. “That’s sort of the new definition of value.”

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McDonald’s

The McPick 2 menu featured an assortment of items that varied by region. The company hasn’t offered a standardized value menu since that time.

But in July of 2017, Easterbrook told investors that the company is bringing its original Dollar Menu back, albeit with new menu options. He stressed that McDonald’s is not positioning itself as the fast food chain with the best value.

“We’re not necessarily looking to win on value because that’s kind of a race to the bottom,” he said.

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iStock

Market analyst Andrew Charles of Cowen and Company suggested that the new menu will hit restaurants in late 2017 or early 2018.

In a report on McDonald’s, Charles suggested that the new menu will focus on strict $1, $2, and $3 price points. However, Charles also warned the chain against “premium” products.

“We continue to believe McDonald’s should avoid premium efforts (i.e., sandwiches priced above $5) given the recent history of limited success,” Charles wrote.

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