Reports: McDonald's planning $5 meal deal to win back customers
LOS ANGELES - McDonald’s reportedly planning to launch a $5 meal deal in the U.S. to attract customers deterred by rising fast-food prices, according to a source who spoke to Bloomberg anonymously.
The value meal will offer a choice between a McChicken or a McDouble, accompanied by fries and a drink.
Currently, the McChicken sandwich, featuring a breaded chicken patty, shredded lettuce, and mayonnaise, costs $5.59 at a McDonald's in Times Square.
McDonald’s did not immediately respond to FOX TV Station’s request for comment.
The potential introduction of the $5 meal deal comes at a crucial time for McDonald's, as it grapples with lower-than-expected earnings. The rising menu prices have been a deterrent for cost-conscious, low-income families affected by inflation, leading to a first-quarter net income of $1.93 billion, as reported by the New York Post.
Market reaction to the $5 meal deal announcement
The news of the potential $5 meal deal immediately impacted McDonald’s shares, which rose as much as 2.7% on Friday, the most significant increase since January 2023, following Bloomberg's report.
On McDonald’s earnings call in April, CEO Chris Kempczinski remarked, "It is clear that broad-based consumer pressures persist around the world."
Kempczinski added during the earnings call, "Consumers continue to be even more discriminating with every dollar that they spend as they face elevated prices in their day-to-day spending."
This follows criticism McDonald’s received over its Big Mac combo, which was priced at nearly $18 in some locations.
CA raises wage for fast-food workers to $20/hour
California Gov. Gavin Newsom signed a law that increases the minimum wage for fast-food workers in the state to $20 per hour. The new wage takes effect on April 1, 2024, and applies to workers at restaurants that have at least 60 locations nationwide. LiveNOW's Carel Lajara spoke about the minimum wage increase and what it means for the fast-food industry with Enrique Lopezlira, the Director of the Low-Wage Work Program at UC Berkeley. More LiveNOW from FOX streaming video
The cost increase has particularly affected California, where new regulations on April 1 mandated a $20 hourly wage for fast-food workers.
In February, McDonald's reported a slight decline in U.S. customer traffic, noting fewer visits from individuals with annual incomes below $45,000.
Chief Financial Officer Ian Borden said the company did increase U.S. prices in the third quarter but at a lower rate. He said McDonald’s expects its U.S. prices to rise by just over 10% for the entire year.