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McDonald’s working on $5 value meal
The potential new offer comes at a time when low-income consumers are starting to pull back in spending, especially on fast-food brands. Mentions of low-income consumers on company earnings calls are at their highest levels in nearly two years, according to data from Bank of America. McDonald’s executives Wendy’s for Dave and Buster everyone noticed the restraint in spending.
McDonalds recently reported a mixed first quarter, with US same-store sales slightly below expectations. Higher prices helped increase average checks, but some consumers held back due to higher costs.
“Consumers continue to be even more demanding with every dollar they spend, as they face high prices on their daily expenses, which is putting pressure on the [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company’s April 30 earnings call.
He added that McDonald’s needs to be “focused” on accessibility to attract customers.
On the call, Kempczinski said the company is working on a national value agreement in the U.S., and the company’s chief financial officer, Ian Borden, said the U.S. leadership team was working closely with owner-operators in this environment. McDonald’s companies and franchisees, who operate 95% of McDonald’s stores and participate in these offers, are often at odds over promotions that could hurt owners’ profits.
An initial proposal from McDonald’s for the $5 meal did not clear the necessary hurdles, and additional details are now being discussed, according to a person familiar with the process. A second person said Coke added marketing funds to the equation to make the business more attractive.
McDonald’s and Coca-Cola declined to comment to CNBC.
—CNBC’s Amelia Lucas contributed to this article.