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McDonald's Dollar Menu Fails

usa hamburger chain profits dip franchisees steal customers

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#1 Hum

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Posted 20 April 2013 - 21:48

NEW YORK — McDonald's managed to eke out a higher profit for its first quarter even as the world's biggest hamburger chain failed to lift sales with its Dollar Menu.

The company said Friday that an important sales measurement fell 1 percent during the period and warned that it's expected to dip again in April.

That marked the first quarterly decline in a decade in sales at restaurants open at least 13 months and underscored the troubles the company has been facing.

As Burger King and Wendy's have stepped up their marketing over the past year or so, McDonald's has responded by aggressively touting its Dollar Menu and other value deals to hold onto customers in an industry where imitation is rampant.

The strategy has caused concern among analysts who worry that it could eat into profit margins. It's also rankled some McDonald's franchisees, who operate the vast majority of its restaurants in the U.S.

But in a conference call with analysts Friday, McDonald's executives insisted that offering cheaper prices was necessary in the current climate. Since the restaurant industry is barely growing, they said McDonald's needs to steal customers away from rivals to grow.

"That battle for market share has become so critical for the long-term health of business, we're willing to sacrifice that margin," said Peter Bensen, the company's chief financial officer.

Although profit margins declined during the first quarter, McDonald's noted that it picked off market share in many parts of the world, including the U.S.

But there are signs such deals aren't sitting well with the independent franchisees who operate restaurants.

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#2 arachnoid

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Posted 20 April 2013 - 22:49

Makes you wonder just how much horse meat is in a dollar burger :woot: :laugh:

#3 FloatingFatMan

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Posted 21 April 2013 - 09:46

Makes you wonder just how much horse meat is in a dollar burger :woot: :laugh:


Now there was neigh need for that... ;)

#4 Raa

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Posted 21 April 2013 - 09:59

The strategy has caused concern among analysts who worry that it could eat into profit margins.

I see what they did there.

#5 +Nik L

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Posted 21 April 2013 - 10:08

I read an article on McDonalds branding about 5 years ago, and it mentioned the £1 menu they have over here. It said how it was a complete failure, as people still ordered with EXACTLY the same trends as before - sold the same number of hamburgers whether they were on the £1 menu or not - it literally had NO effect on sales patterns. However, it did have an effect on the brand.

McDonalds had never before pushed their price as an issue - it had always been built around desire (their best advert being the man slowly biting into a Big Mac IMHO). All the £1 menu succeeded in doing was devaluing the brand by making it about lower prices.

Interesting read actually...

#6 OP Hum

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Posted 21 April 2013 - 16:10

^ I know the managers comment on how much customers buy, around here.

#7 Growled

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Posted 22 April 2013 - 02:01

I wonder if maybe people aren't eating out as much as they once did? Money is still tight.

#8 +Tech Greek

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Posted 22 April 2013 - 04:33

I stopped going to McDonalds as much because the service is always TERRIBLE! (...at any location I go to - I don't understand how you forget a straw on a combo meal almost every single friggin time).

#9 Nashy

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Posted 22 April 2013 - 04:51

Her ein Australia the reports stated that it's value menu was the biggest profit driver in this country.

McDonalds are by far the leader her in Australia for their selection and value.

#10 morebaker

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Posted 22 April 2013 - 04:55

actually do not mind there smoothies

#11 shadodemon

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Posted 22 April 2013 - 05:44

They got rid of Dollar Fries and Sundaes and Double Cheese Burgers and replaced that with a McDouble and they got rid of more Dollar options. Exactly what did they think was going to happen? They are stupid in the head if they think increasing the price of items will make people buy more.

#12 OP Hum

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Posted 22 April 2013 - 22:05

I stopped going to McDonalds as much because the service is always TERRIBLE! (...at any location I go to - I don't understand how you forget a straw on a combo meal almost every single friggin time).


They mess up my sandwich about every third time -- I have to constantly check what I get.

Last time a manager got rude with me about it -- so I sent McDonald's Corporate a little e-mail. :shifty:

#13 COKid

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Posted 22 April 2013 - 22:20

They can blame the Dollar Menu if they want, but when they charge nearly $7 for a Double Quarter Pounder Extra Value Meal, I make other choices. Yes, I suppose their prices are competitive with other chains, but seems a little high if you ask me. On the cheap end of the menu, Burger King seems to have more, and tastier, choices. As does Wendy's and Arby's. I guess I'm just bored with McDonalds.

#14 compl3x

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Posted 22 April 2013 - 22:24

I wonder if maybe people aren't eating out as much as they once did? Money is still tight.



Considering fast food is usually cheaper than buying and cooking your own fresh ingredients, I doubt this is the case.

#15 srbeen

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Posted 22 April 2013 - 22:29

"That battle for market share has become so critical for the long-term health of business, we're willing to sacrifice that margin," said Peter Bensen, the company's chief financial officer.

I love quotes like that from large and unhealthy restaurants.

Considering fast food is usually cheaper than buying and cooking your own fresh ingredients, I doubt this is the case.


Exactly. McDonalds is just killing off their competition. Once they hit that hospital bed theres no McDonalds for months afterwards, if at all.