Big Mac Price Cuts Signal McDonald’s Return To Value As QSR Battles Intensify

The era of $18 Big Macs, which we called “Mcflation,” ignited during the Biden-Harris regime years of generational-high inflation fueled by out-of-control green spending, looks to be ending.

A new internal memo obtained by The Wall Street Journal shows McDonald’s will slash combo meal prices to drive increased foot traffic and restore its reputation as an affordable burger chain after the $18 Big Mac price shocked working-class and middle-class customers during the Biden-Harris years.

One McDonalds branch in Darien, CT is charging as much as $18 for a Big Mac combo meal. https://t.co/Nj7RLTh4KP pic.twitter.com/ojEOnBVO3J

— zerohedge (@zerohedge) October 30, 2023

The burger chain will slash the price of eight combo meals by 15% and launch $5 breakfast and $8 Big Mac and McNugget specials later in the second half of the year. The new marketing campaign, focused on affordability, will be branded as “Extra Value Meals.”

“Customers are telling us they need more of the everyday value and affordability that defines the McDonald’s brand,” said Joe Erlinger, head of McDonald’s U.S. business, in an internal memo.

McDonald’s told restaurant operators that it would subsidize them if they lost money under the new price strategy. The chain and operators will both contribute funds to advertising campaigns.

Here’s why this new pricing strategy matters:

• McDonald’s is trying to repair its affordability image as cash-strapped consumers dial back fast food spending.

• U.S. restaurant traffic is down 1.7% this year, and fast-food traffic specifically is off 2.7%.

• While U.S. same-store sales grew last quarter, customer counts fell short of expectations.

McDonald’s has spent the better part of a year rolling out new value menu items as price hikes in recent years shocked low-income consumers.

Earlier this month, the company’s CFO highlighted one alarming trend among working-poor customers: they are “skipping a daypart like breakfast, trading down within our menu, or opting to eat at home.”

In a note to clients, UBS analyst Dennis Geiger highlighted the widening gap between food away from home and food at home; in other words, eating at home is getting much cheaper.

The point here is that McDonald’s is supercharging its value-driven strategy after more than a year of offering value meals, a move that will only spark continued price wars among rivals across the quick-serve restaurant space.