McDonald’s brought back its Extra Value Meals platform in September, after spending weeks working to convince franchisees to lower prices on the popular combo meals. The company gave a lot to do this, including a $40 million marketing investment, promised help when franchisees lose money on the effort, plus other concessions.
The investments the company made were relatively rare, and demonstrative of the franchisor’s conviction in its belief that it needed lower prices on its everyday items.
“Over time, we have gotten out of whack on our EVMs, and that was having a drag on our value perception,” McDonald’s CEO Chris Kempczinski told analysts on Wednesday, referring to Extra Value Meals. “And so we went to U.S. franchisees with a path forward on how we’re going to fix EVMs.”
The good news, he said, is that “98%, 99% of our franchisees recognize that we had an issue with EVMs that we needed to address.”
Executives remain convinced this strategy will work and will build over time, ultimately making the promotion so valuable that it will continue long after those investments dry up.
Yet this strategy is running into a cost environment that has already hit franchisee profit margins, particularly the cost of beef. That could test franchisee support if this strategy hurts profitability without providing the requisite boost to customer traffic.
McDonald’s U.S. same-store sales increased 2.4% in the third quarter. That met investors’ somewhat muted expectations for the period, but it didn’t exactly blow people out of the water, particularly considering that the period included a Snack Wrap reintroduction that was among the best in company history.
The company will also get better results this quarter, thanks to a combination of easy comparisons (remember the E. coli thing?) and the Monopoly promotion.
McDonald’s is also counting on an improved reputation among budget-conscious consumers. The company is on the second of two planned marketing boosts for those value meals, highlighted by an $8 10-piece Chicken McNuggets meal.
The real test will come at the end of the first quarter next year, when McDonald’s investments behind the EVM plan stops. By that point, executives say, the results will leave franchisees no choice but to keep it going.
“By the end of Q1, our system is going to be in a position here where it’s actually going to be a better decision to continue with the EVM than it is to go back where we were and create the problem all over again,” Kempczinski said. “So my expectation is that we’re going to see the system continue with this EVM program, because we’ve essentially bridged them through the most difficult part and any move backward would actually be self-defeating.”
There is little question the consumer is having a tough time. Traffic to quick-service restaurants from lower-income diners is down in the high-single digits. Among higher-income consumers it’s the opposite—and McDonald’s is gaining share among that particular group.
Plenty of other data back that up. A report released by the consulting firm Alvarez & Marsal found growing disparity between higher- and lower-income consumers. Credit card data from Bank of America showed a gap in spending between lower-income consumers and those in the middle- and higher-income categories. McDonald’s expects this dynamic to continue through next year.
The burger giant is still making a big bet that its lower prices will work, even if it did win strong franchisee backing. Beef costs are unusually high. Other costs are not exactly going down. Franchisee-level margins are taking a big hit.
Executives acknowledge the impact those prices are having on store margins. They also acknowledge the difficulty of balancing the need for value with the need for operators to make money.
“You’re trying to thread a needle here because you’re trying to be able to push through some pricing to offset the inflationary pressures that are going to continue,” Kempczinski said. “At the same time, you’ve got a consumer, particularly a low-income consumer, who’s really resistant to any additional pricing.”
The company is nevertheless convinced that traffic growth is key. Get customers in, sales will come, and profits will follow. “We’ve got to go after guest count-led growth,” CFO Ian Borden said. “Nothing fundamentally has changed in our belief that we can drive margin accretion over time.”
We can’t necessarily argue with that, but that doesn’t make it anything less than a big bet. McDonald’s value reputation was hurt by the run-up in menu prices coming out of the pandemic, and it may well take more than a few months to turn that around. Just look at the post on X.com at the end of this piece.
If the EVM plan doesn’t keep pulling in more traffic to offset the margin loss, then that franchisee support may waver. And if it does then the plan may not last all that long.
One of the most absurdly high priced fast food spots. This recession will be humbling for their stock price which has catapulted into fantasyland pic.twitter.com/51ACFmScH4
— Brooke (Bates) Bilyj (@batesbn) November 5, 2025