Dive Brief:
- McDonald’s began an eight-week test of two new affordable menu systems across dayparts in about 1,900 restaurants last week, CEO Chris Kempczinski said during a Wednesday earnings call.
- One of the test ideas is mix-and-match bundles that offer more choice based on the results of prior buy-one-add-on offers. The second test consists of fixed bundles that offer a set combination at an “attractive price and make ordering more straightforward,” he added.
- Franchisees representing about 4,000 additional restaurants have added similar entry-level bundles before analysis of the formal test results. McDonald’s will use lessons from these tests to launch a new national value program in early 2027.
Dive Insight:
The shift in its value structure comes just months after CFO Ian Borden said the chain’s $3 and Under menu, which launched in April, didn’t resonate well with consumers due to low awareness and inconsistent franchisee execution across its system.
While McDonald’s U.S. comparable sales were down 0.2% during the third quarter, sales turned positive in September, Kempczinski said.
The improvements by the end of the quarter were due to several interventions, including the restoration of some digital offers that increased traffic with its most engaged customers, a shift in marketing toward more entry-level value platforms and greater focus on restaurant-level execution, he added.
“We're encouraged by the initial response to those interventions and the direction of the business,” Kempczinski said. “At the same time, we know there’s more work to do. Our focus now is to build on that improvement and accelerate baseline performance.”
The value tests and franchisee offerings cover 40% of the U.S. system, demonstrating strong alignment across the system around entry-level value options, he said.
“We've already made significant improvements to address holistic value across our menu, which contributed to improvement in value and experience scores across our top 10 markets,” Kempczinski said. “Today, our base menu pricing across the industry's most popular menu items in chicken, beef, and beverages is generally below that of our near end competitors.”
The chain restored various regional and national digital offers including a $2 breakfast sandwich and free fries with a $1 minimum purchase, Borden said during the Wednesday call.
“The initial responses to the mass digital offers exceeded expectations for both incremental guest count and sales, and helped to reverse the decline in baseline trends we saw in Q2 and early in Q3,” Borden said.
The chain also reallocated marketing support for rest-of-day, entry-level meal deals and Extra Value Meals.
Since relaunching Extra Value Meals over a year ago, unit sales for the combos comprising its top EVMs were up about 7% compared to the previous year, and “we’ve consistently seen incremental traffic with higher average check and margin,” Borden said.
In September, McDonald’s laid out its Next initiative, a new strategy that focuses on restaurant modernization, technology deployments, operational improvements and menu innovation. The chain plans to invest $8.5 billion to provide partner support through 2036, including about $5 billion by 2030 consisting of rent relief and capital support.
