Franchise owners blast McDonald’s over new $5 meal deal

An independent advocacy group of McDonald’s franchisees has voiced concerns over the fast food giant’s aggressive promotion of a $5 value meal.

Restaurants are already struggling with the restraints of Bidenomics, and the National Owners Association said in a letter to membership that the promotion can’t last without company investment, CNBC reported.

“The fact remains that in order to provide the consumer with more affordable options, they must be affordable for the owner/operators,” the letter stated, adding, “McDonald’s vast resources and financial investment are essential to any sustainable affordable strategy.”

According to the group, the McDonald’s business model is a “penny profit business, with 10-15% margins.”

“There simply is not enough profit to discount 30% for this model to be sustainable. It necessitates a financial contribution by McDonald’s,” the letter states.

The $5 value meal is scheduled to begin on June 25 and run for about a month. Customers will have a choice of a McChicken, a McDouble, or a four-piece chicken nuggets, along with fries, and a drink.

With prices rising and traffic decreasing, McDonald’s is hoping the promotion will lure customers back.

“We know how much it means to our customers when McDonald’s offers meaningful value and communicates it through national advertising. That’s been true since our very beginning and never more important than it is today,” the company said last week in a statement.

McDonald’s CEO Chris Kempczinski said in a late April first-quarter earnings call that the chain had to be “laser-focused on affordability” with results being “weaker than expected.”

“What we don’t have in the US right now is a national value platform,” he reportedly said.

The value meal was met with skepticism when it was announced.

“At McDonald’s, franchisees pay into an advertising fund and get to weigh in on major marketing campaigns, including promotions such as the viral Grimace Shake. A prior attempt to get operators — who run about 95% of US stores — to endorse the $5 meal initiative failed earlier this year,” an anonymous source told Bloomberg.

“Some operators were concerned about losing money on the roughly four-week promotion, particularly in states such as California, where the minimum wage for fast-food workers jumped 25% to $20 an hour earlier this year,” the outlet reported.

Coca-Cola was enlisted to add marketing funds to make the deal more appealing for McDonald’s and its franchisees, CNBC noted.

“We routinely partner with our customers on marketing programs to meet consumer needs. This helps us grow our businesses together,” Coca-Cola said of its participation.

The NOA letter suggested that McDonald’s “should continue to innovate on the menu, bringing back items such as snack wraps that use existing chicken breasts, creating affordable options with lower food costs so they are more affordable for owners to sell,” the network reported.

Tom Tillison


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