McDonald’s strikes early in value battle Joe Raedle/Getty Images News/Getty Images

McDonald’s strikes early in value battle

Multi-tiered Dollar Menu to offer new options come January

McDonald’s unveiled a three-tiered value menu Tuesday that will debut Jan. 4 as quick-service operators brace for slimmed-down post-holiday wallets.

The Oak Brook, Ill.-based burger chain said it will offer a choice of three to four items at $1, $2 and $3 levels, with options at the lighter side of its barbell pricing while it continues to roll out premium items like fresh beef burgers and Signature Crafted Recipe sandwiches.

“We built this new menu with variety and value firmly in mind,” said Chris Kempczinski, president of McDonald’s USA, in a statement. The menu is the first time McDonald’s has included the popular Happy Meal at the $3 level, among the promoted value offerings.

“Our new value menu includes surprises like our completely new Classic Chicken sandwich, the inclusion of our Happy Meal and more,” Kempczinski said. “Whatever our guests crave – a delicious meal, a new taste, a mid-day snack or a family treat – they will find that $1 $2 $3 Dollar Menu provides them with value and choice.”

McDonald’s, which jettisoned the Dollar Menu in 2013 for the more flexible Dollar Menu & More, is giving its franchise owners more flexibility with the 1-2-3 punch.

The value meal offers include:

 $1 Menu
· Sausage Burrito
· McChicken Sandwich
· Cheeseburger
· Any size soft drink

$2 Menu
· Sausage McGriddles
· Two-piece Buttermilk Crispy Tenders
· Bacon McDouble Burger
· Small McCafé beverage (excluding hot and iced coffee)

$3 Menu
· Sausage McMuffin with Egg
· Classic Chicken Sandwich
· Triple Cheeseburger
· Happy Meal

The Classic Chicken Sandwich is new to the Dollar Menu, featuring a buttermilk crispy chicken filet on a toasted bun with pickles and the recently introduced sweet and tangy Signature Sauce.

The retooled value menu is being introduced as McDonald’s continues to work on the more expensive end of the price barbell, including the move toward more premium products like a fresh beef Quarter Pounder and the Signature Crafted Recipe line.

“Additional efforts around national value, quality, premiumization and beverages could layer additional sales on top while other QSR players scramble to keep up,” said Andy Barish, an analyst with Jefferies, wrote in a note Tuesday.

Barish raised Jefferies’ rating for McDonald’s to Buy from Hold, citing the company’s refranchising, technology and delivery efforts. McDonald’s stock price at mid-afternoon Tuesday was up about 1.5 percent from Monday’s close of $170.65 a share.

Since fourth quarter 2015, McDonald’s same-store sales increases have averaged 2.6 percent while its rivals’ same-store sales have risen less than 1 percent.

Value war heats up

By announcing its tiered menu a month before the January promotion starts, McDonald’s, with more than 14,000 domestic units, lays down a yardstick by which rivals’ value moves will be measured.

Burger King, the burger division of Oakville, Ontario-based Restaurant Brands International Inc., has more than 7,100 domestic units and is still offering its “2 for $6” options and a Value Menu.

Dublin, Ohio-based Wendy’s Co., with 5,700 U.S. units, is emphasizing value with its “Right Price, Right Size Menu” as well as a 50-cent Frosty dessert promotion, as well as a “4 for $5” meal that includes a Giant Junior Bacon Cheeseburger, fries, four chicken nuggets and a small drink.

Smaller competitors also have skin the game.

San Diego-based Jack in the Box Inc. will feature a value message in January, CEO Lenny Comma said in a November earnings call. “Our value promotion will be our primary message on media,” he said, adding that discount deals would have the “lion’s share” of advertising bandwidth for the 1,300-unit brand. In addition, Comma said new limited-time offers and specials between $1 and $5 would be rolled out.

CKE Restaurants Holdings Inc., parent to the Carl’s Jr. and Hardee’s brands, has been promoting its $5 All Star Meal value box. The two brands have a combined 3,800 units. 

“Five dollars is the consumer sweet spot,” Jeff Jenkins, chief marketing officer of the Franklin, Tenn.-based company, said. “Anything less than $5 is a perceived value – it’s one easy bill, easy to swipe or tap. For us, it was about providing substantial value at $5 with no compromise, and giving people a way out of mismatched value-menu bingo to get a real meal.”

Contact Ron Ruggless at [email protected] 

Follow him on Twitter: @RonRuggless

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