In recent weeks, there has been a surge in low-price value meals launched by multiple companies in the American fast-food industry, indicating a potential price war. For instance, McDonald’s plans to introduce a $5 value meal comprising a McChicken or McDouble, four-piece chicken nuggets, fries, and a drink, starting on June 25th. Burger King has also announced its intention to launch a $5 value meal before McDonald’s and extend the promotion for several months. Wendy’s initiated a $3 breakfast deal last week. This move toward low-price offerings is a response to disappointing first-quarter earnings reports across the fast-food sector. McDonald’s experienced lower than expected same-store sales growth and revenue, and other major chains such as Starbucks, KFC, and Pizza Hut reported declines in same-store sales. This has resulted in an over 8% drop in McDonald’s stock price over the past month. The fast-food industry has attributed these actions to inflationary pressures faced by American consumers, who are increasingly seeking value for their money. Rising fast-food prices have been a common complaint on social media, with McDonald’s acknowledging that they have raised menu prices due to rising costs and wages. Prices for popular items such as the Big Mac, Egg McMuffin, and Chicken McNuggets have increased by significant percentages compared to 2019. Franchise owners have witnessed a decline in customer traffic and reduced spending by those who do visit their restaurants. While low-price value meals aim to attract value-seeking consumers, franchisees are feeling the pressure on their profits. Factors such as increased minimum wage for fast-food workers and rising costs of raw materials like milk, eggs, beef, and chicken have added to the operating costs for franchise owners. The concern is that without additional investment and support from the companies, sustaining such significant price cuts for value meals may not be viable in the long run.
