By Jay Bemis | Advertising Systems Inc.
This summer’s Paris Olympics and US election seasons could just sprout a fast-food advertising war as restaurants try to lure back price-weary customers.
It was reported earlier this week that McDonald’s is mulling a $5 meal option to add to its menu, not only as a lure to woo back customers but also to fall in line, perhaps, with competitors who already are offering five-buck options – such as Wendy’s $5 “Biggie Bag” and Burger King’s $5 Breakfast Bundles.
McDonald’s seemed to confirm the meal deal on Wednesday in a statement to CNBC.
However, citing a source “familiar with the offering who was not authorized to speak about it publicly,” the promotion will only last about a month, beginning June 25, CNBC said. That, coincidentally, would be about the time that Olympics and political ads begin to proliferate for the rest of the summer.
“We know how much it means to our customers when McDonald’s offers meaningful value and communicates it through national advertising,” the company said Wednesday in its official statement to CNBC. “That’s been true since our very beginning and never more important than it is today.”
The promotion will offer four items for $5, which will include a McChicken or McDouble, plus four-piece chicken nuggets, fries and a drink, CNBC said.
By comparison, those same items are part of Wendy’s newer $5 “Biggie Bag” meal deal for its customers, which includes a burger, a small order of fries, four chicken nuggets and a soft drink.
McDonald’s and fast-food restaurants in general have received consumer complaints about rising prices in recent months, and McDonald’s executives have said the chain would work to offer more deals. Its sales increased 1.9% between January and March, but that was below the 2.1% increase in sales it had forecast.
Earlier this week, Chris Kempczinski, McDonald’s president and CEO, told the Washington Examiner: “The consumer is certainly being very discriminating in how they spend their dollar. It may be more pronounced with lower-income consumers, but it’s important to recognize that all income cohorts are seeking value.”
Economy a Major Issue for Weary Consumers
Restaurants took some negative blows in another recent report, this one from the experts at eMarketer.
In that report, “5 key stats on how consumers are dining and what it means for retailers,” eMarketer noted that because inflation is on the rise, competition for consumer dollars is heating up between restaurants and retailers.
Citing figures from the US Department of Agriculture’s (USDA) Economic Research Service, eMarketer said the consumer price index (CPI) for food was up 2.2% year-over-year in March 2024.
Prices of food at home — via grocery store or supermarket purchases — were up 1.2% year-over-year, while prices of food away from home, via restaurant/fast-food purchases, were up 4.2% YoY.
Consumers particularly are cutting back on delivery costs, which is one trend that’s hurting restaurants, the eMarketer report said.
It added:
“For some consumers, delivery isn’t worth the extra cost. Retailers that want to boost delivery adoption should keep fees to a minimum, potentially using a membership subscription to offer free delivery without having to absorb the cost of delivery logistics.”
The report also noted that nearly half (48%) of consumers worldwide have decreased their spending on fast food after a “very poor” experience with a restaurant and that 16% of consumers say they’ll stop spending with that brand altogether.
“While fast food is the category consumers are most likely to decrease or stop spending, supermarkets, department stores and online retail are all in the top 10 places consumers will pull back on after a bad experience,” eMarketer said.
“While pricing plays a major role in courting consumers, it’s not the only thing that matters. Retailers need to invest in the customer experience to keep consumers coming back, investing in making the shopping journey as personalized and seamless as possible.”
