McDonald’s last month took the unusual step of lowering prices, by an average of about 5%, on its combo meals, bringing back the Extra Value Meals moniker while pricing a Big Mac meal at $8.
The result hasn’t translated into a lot of traffic growth, at least according to the foot traffic tracking firm Placer.ai.
Traffic at the Chicago-based burger giant has been negative since July, according to the firm, despite the lower prices and the return of the Snack Wrap. Traffic to the chain declined 5% the week ended Sept. 15 and 3.7% the week ended Sept. 22, the weeks after the campaign was launched. In both cases, the company’s traffic underperformed the broader quick-service category.
It’s also worth noting, however, that McDonald’s was coming up against a value push of its own from a year ago, which could be depressing year-over-year results somewhat. The company last year pushed a $5 Summer of Value campaign and traffic at times during that period was up in the double digits.
But the results suggest the sheer difficulty of the current environment for fast-food chains that cater to a broad set of low-income consumers.
Diners have been willing to come into various restaurant chains when something entices them to, such as a social media campaign (Chili’s) or a special event (McDonald’s return of the Snack Wrap, the launch of the Pumpkin Spice Latte at Starbucks).
Getting them in the door the rest of the time has proven to be a particular challenge.
At the same time, discount marketing is an almost constant presence, whether consumers are ordering from third-party aggregators or they’re walking into a random fast-casual chain location in Virginia.
Most of McDonald’s competitors are pushing value heavily. Taco Bell has successfully generated traffic with its Luxe Boxes priced at $5, $7 and $9. Subway, Burger King, Wendy’s, most of the pizza business and many other chains are offering some kind of discounts, enough that 29% of all traffic is on some form of offer. Value, in other words, might simply be a cost of doing business right now.
At McDonald’s, however, the success of the Extra Value Meals promotion is crucial because company executives convinced franchisees to lower prices, arguing that the company needed to fix its core menu prices. Executives have also argued that the company needed to “recalibrate” its value proposition.
“Value is in our DNA,” CEO Chris Kempczinski said in May. “But I’ll be the first to say that we had to take a step back and we had to recalibrate in 2024.”
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