McDonald’s struggles to make value meals affordable under Biden’s inflation pressure

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McDonald’s has always prized its core values of “quality, cleanliness and value.” But it is losing the value fight thanks to Bidenflation.

Price increases have been causing customers to find other alternatives for lunch.

So now McDonald’s is struggling to make value meals more affordable despite the rampant inflation in the Biden economy.

High prices scaring away fast-food customers

Food prices have skyrocketed thanks to inflation accelerated by President Joe Biden.

The price of food is up over 20% since he took office, well past the normal overall inflation rate target of 2%.

That has left fast food restaurants with no choice other than raising their prices, which is pricing out some of their customer base.

McDonald’s and other major chains warned that penny-pinching customers are buckling under the weight of inflation.

McDonald’s CEO Chris Kempczinski said on an earnings call, “It is clear that broad-based consumer pressures persist around the world. . .Consumers continue to be even more discriminating with every dollar that they spend as they faced elevated prices in their day-to-day spending.”

After softer than projected earnings, Kempczinski vowed that McDonald’s had to be “laser-focused on affordability” because of how price-sensitive consumers have become in light of Bidenomics.

It’s not uncommon for “value” menus today to feature items that cost $4.

Customers used to be able to get a combo meal for that price.

Many consumers have been forced to cut back on their fast-food spending.

The story of an absurdly priced $18 Big Mac at a rest stop in Connecticut went viral, causing embarrassing headlines for McDonalds.

Now McDonald’s is attempting to create a new value meal as part of Kempczinksi’s promise.

New $5 value meal

McDonald’s is launching a new $5 combo meal in hopes of getting customers in the door.

Nowadays, a $5 combo meal is almost unheard of.

Bloomberg reported that the combo meal might include a McDouble cheeseburger or McChicken sandwich along with fries and a fountain drink.

Franchisees, who operate roughly 95% of the chain’s restaurants, had previously rejected the $5 combo meal; franchisees pay royalty fees to the company and get a vote on promotion campaigns.

Due to rising labor costs, franchisees were concerned about offering a $5 combo meal.

In California, for example, the minimum wage was artificially boosted to $20 per hour for fast food workers.

Coca-Cola, a major partner of the restaurant, is being recruited by McDonald’s to help defray the cost of the promotional deal, which would ease financial pressure on franchisees.

McDonald’s franchisee John Palmaccio told Bloomberg News in a statement that McDonald’s, suppliers, and franchisees are working together to provide “great value and affordability” and that “our customers really need it.”

On the earnings call, Kempczinski said that McDonald’s was falling behind its competitors in national promotions focused on values.

For instance, Burger King is running a $5 promotion for two Whopper Jr.’s, and Wendy’s is offering two breakfast sandwiches for $3.

A McDonald’s franchisee group implored the company to bring back its beloved snack wraps because they’re “craveable, relatively simple to produce” and would “easily satisfy the call for more affordable options on the menu.”

Inflation has put a lot of pressure on value menus, but companies are finding a way to make it work with customers scaling back.

Informed American will keep you up-to-date on any developments to this ongoing story.