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McDonald’s New 'Dollar Menu' Goes Up to as much as $5

usa rebranding starting price tiers inflation franchisees

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#1 Hum

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Posted 24 October 2013 - 21:09

Since McDonald’s (MCD) launched the Dollar Menu nationally in 2002, it has grown to about 13 percent of sales–a whole lot of McDoubles and Sausage Biscuits. But the menu is no longer working for the burger chain, so it’s rebranding it as the “Dollar Menu & More” with $1 and $2 sandwiches and even some items at $5. It’s more like a neighborhood dollar store now: the name refers to the starting price.

The idea is to promote value at additional price tiers. Hey, maybe packaging a $2 sandwich on the menu will make it seem like a better deal. McDonald’s CEO Don Thompson explained during an earnings call on Monday that the menu “gives customers a value ladder of sorts, so that based upon their discretionary spending, they have multiple offers at McDonald’s.” He emphasized that $1 items will remain–it’s still critical to retain customers–and that the chain is not abandoning the old Dollar Menu concept but helping it evolve.

The Dollar Menu & More is already being tested in five U.S. markets, Bloomberg News reported last month. All restaurants will offer Dollar Menu & More starting Nov. 4, and advertising for the menu will launch Nov. 11.

Emphasizing price tiers diverges somewhat from McDonald’s “high-low” strategy that focused on value products like the $1 McChicken on one end and premium products like McWraps and Mighty Wings on the other. (The wings haven’t performed as well as the chain had hoped.) “We have to be able to balance both of those two ends of the barbell, if you will. And also I would say we also have to fill in what’s in between. That’s the reason for Dollar Menu & More, when we talk about $2 price points with sandwiches that have a few additional things to offer than our base value Dollar Menu offerings do,” Thompson said on Monday’s call.

Adjusted for inflation, a dollar bill in 2002 is the equivalent of $1.30 today, making the economics of the Dollar Menu challenging for already strained franchisees. “This is one of the ways that we can maintain the Dollar Menu in the face of rising commodities and labor pressures,” Thompson explained, “but also get a little bit more margin basis on some of the products at $2 and some of the products at higher price points from there and the franchisees support this.”

That raises another point in favor of the higher-priced menu: As seductive as the $1 price point might be, one day it will be impossible to sell a burger for so little. The new menu will help customers become accustomed to seeing the higher prices at low-end of the menu. :huh:

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#2 Mr.XXIV

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Posted 24 October 2013 - 21:11

This is why I order Jimmy John's instead.



#3 SierraSonic

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Posted 24 October 2013 - 21:13

I almost never buy any 'food' from these places that is over a dollar... so soon I'll be forced to just buy better food in the same price range.



#4 Growled

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Posted 25 October 2013 - 00:50

 

That raises another point in favor of the higher-priced menu: As seductive as the $1 price point might be, one day it will be impossible to sell a burger for so little. The new menu will help customers become accustomed to seeing the higher prices at low-end of the menu.

 

I guess before long we'll be seeing the $10 Value Meal?



#5 Dane

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Posted 25 October 2013 - 01:54

I guess before long we'll be seeing the $10 Value Meal?


Burger kind. Adds up. Sonic, yesterday went to sonic my wife and I, since we rarely go. Got two burgers. Tots drinks. Onion rings. $18. I was like "holy ######!" I don't know how people can do that every day or week

#6 Growled

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Posted 25 October 2013 - 13:46

Burger kind. Adds up. Sonic, yesterday went to sonic my wife and I, since we rarely go. Got two burgers. Tots drinks. Onion rings. $18. I was like "holy ****!" I don't know how people can do that every day or week

 

I hear ya. My wife and I rarely go out now for the same reason. And yet we have friends that eat out all the time and I wonder "how you you all afford that?" 



#7 OP Hum

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Posted 25 October 2013 - 23:30

^ I get tired of the panhandlers at our local McDee's.

 

And after they pester you for a 'dollar', I see them come back with 5 or 10 bucks worth of food. :huh:



#8 +ngc891

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Posted 25 October 2013 - 23:43

What is a "sausage biscuit" ??? We don't have them in MaccyD's in the UK.



#9 vetneufuse

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Posted 25 October 2013 - 23:47

Burger kind. Adds up. Sonic, yesterday went to sonic my wife and I, since we rarely go. Got two burgers. Tots drinks. Onion rings. $18. I was like "holy ****!" I don't know how people can do that every day or week

What in the world did you order to get that high? My family owns a sonic franchise, and out here you can get two of the Super sonic burger meals with rings and tots large size for $15 The average "large" mean is around $6.39, your franchisers must want higher profit margins



#10 soldier1st

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Posted 25 October 2013 - 23:58

What in the world did you order to get that high? My family owns a sonic franchise, and out here you can get two of the Super sonic burger meals with rings and tots large size for $15 The average "large" mean is around $6.39, your franchisers must want higher profit margins

How big are the meals? if they are small then $15 is crazy, but if they are large then maybe $15 would be acceptable but include free drink refills unless you already do that.



#11 OP Hum

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Posted 26 October 2013 - 03:34

What is a "sausage biscuit" ??? We don't have them in MaccyD's in the UK.

th?id=H.4742594268956559&pid=15.1&H=150&

It's just a flour & water baked biscuit [maybe buttered top], cut in two, with a cooked pork sausage patty, sometimes with egg and/or cheese.



#12 Deleted Bye

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Posted 26 October 2013 - 03:47

th?id=H.4742594268956559&pid=15.1&H=150&

It's just a flour & water baked biscuit [maybe buttered top], cut in two, with a cooked pork sausage patty, sometimes with egg and/or cheese.

we don't have this in canada either, looks almost the same as the egg mcmuffin...



#13 OP Hum

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Posted 26 October 2013 - 03:50

^ Exactly the same.

 

One has egg, the other doesn't. correction -- McMuffin uses Canadian bacon.

 

Holy heart attack -- the sausage biscuit has Sodium 1080mg !!!

 

http://www.mcdonalds.../breakfast.html

 

I never eat the breakfast sandwiches.



#14 abecedarian paradoxious

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Posted 26 October 2013 - 04:06

I guess before long we'll be seeing the $10 Value Meal?

That will be about the same time minimum wage hits $19.



#15 Nashy

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Posted 26 October 2013 - 04:46

Why you gotta go talk about Maccas?  Now I want some.