McDonald’s to Debut Tiered Value Menu Nationwide Amid MCD ‘Challenges’

by Burke Speaker | October 22, 2013 10:41 am

McDonald’s (MCD[1])  14,000 restaurants in the United States are set to debut a new Dollar Menu & More beginning Nov. 4, which will replace its usual dollar value menu.

The tiered value menu[2] will offer $1 items from the Dollar Menu, but include additional low-cost price points, such as sandwiches for $2 and other items around $5.

“This is one of the ways that we can maintain the Dollar Menu in the face of rising commodity and labor pressures, but also get a little more margin basis on some of the products at $2 and some of the products at higher price points,” chief executive Don Thompson said during McDonald’s third-quarter earnings call.

“The franchisees support this.”

From Restaurant News:[3]

The introduction will follow a third quarter in which same-store sales rose only 0.7 percent in the United States, when McDonald’s tried to build sales of new core offerings by moving the Monopoly game up into July and putting a major national ad campaign behind the Mighty Wings limited-time offer. However, Thompson said, while those initiatives performed within expectations, they did not offset traffic weakened by lower consumer confidence and a drag on discretionary spending.

According to a research note from securities analyst Andy Barish of Jefferies, same-store sales in the United States dipped 0.1 percent for McDonald’s, and comparable sales are tracking flat for the month of October.

The stagnant informal-eating-out market is not expected to improve in the fourth quarter in the United States, Thompson said, making the rollout of Dollar Menu & More even more important.

McDonald’s continues to debut new or limited-time offerings, such as its recent Mighty Wings.

Endnotes:
  1. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  2. The tiered value menu: http://nrn.com/quick-service/mcdonalds-tests-tiered-dollar-menu-more
  3. From Restaurant News:: http://nrn.com/quick-service/mcdonalds-roll-out-dollar-menu-more-nationwide

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