McDonald's Tweaking Its Dollar Menu

I remember when McDonald's used to have an ad where the customer made their purchase and got change back. I think it was change back on $1.00, but it should have been more. (Does that tell you how long I have been around?)

In any case, McD's should forget the $1.00 deal. The alternatives of changing ingredients only lowers the value in a strategy that will ultimately eliminate the meat and bun.

Find a new advertisable price point, i.e. $1.49 and support it with big advertising and give the customer good value with good product.

Gene Detroyer, Entrepreneur, Advisor, Consultant, Professor, Independent

I think its going to be difficult for McDonald's to earn as long as they promote the dollar menu. The margins will just get smaller. Go to any airport McDonald's and you will probably not even find a dollar menu.

I get sort of sad feeling when I see some skinny teenager in McDonald's ordering up three double cheeseburgers, fries, and a coke for $5. It's so cheap, plus easy to figure the cost in his head, that he buys more than he really needs. While this might be the staple diet of our inner cities, I would like to see it changed in mainstream America. Better choices at higher prices seems to be the trend in the food business.

David Livingston, Principal, DJL Research

The $1.00 deal should be scrapped because it's no longer possible to provide quality and value for such a small amount. McDonald's needs to concern itself more with convenience, quality, consistency and value than it does with a gimmick price.

David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates

I agree, don't mess with the ingredients, that's messing up the brand. It's hard to recover from bad product. Like everything else, as the price goes up, keep offering value for the money.

Convenience is also a major factor in McD's sales.

Susan Rider, President, Rider and Associates, LLC

There hasn't been dollar menu at McD's in Canada in years. I remember being able to get a big Mac for 99 cents back in junior high. Now its the $1.79 value menu. They should maintain the dollar price point, considering the economic situation.

Doron Levy, President, TheMortgageMachine.ca

The Dollar Menu is a thing of the past.
McD's should upcharge to two bucks fast.
Ingredients cost more so who's kidding who?
Keep quality up; folks will still come to chew.

Gene Hoffman, President/CEO, Corporate Strategies International

One dollar in 2003 (when the Dollar Menu was launched) is worth about 70 cents now. So, it's nearly impossible for McDonald's or anyone to maintain margin in this scenario.

However, the pull of the Dollar Menu can't be denied, and in these tougher economic times, it might be disastrous to eliminate it completely. Yes, it might need to get paired down somewhat. But they need to get a little more creative on shaking extra pennies from their customers.

One option may be to offer consumers the great 'upsell' option that has worked so well for so many other food service and retail businesses. For example, maybe that cheeseburger is just $1, but for a mere 25 cents more they could offer to replace that processed cheese for real Wisconsin cheddar. Or for just 25 cents more, those addictive french fries come with wild dipping sauces. Who wouldn't dive in to their pocket for another 25 cents? And, therein lies the extra margin needed.

Kevin Graff, President, Graff Retail

McDonald's should remember that they are selling a "value meal," not a dollar meal. Dollar stores have learned that you don't have to sell everything at a dollar to be a "dollar store."

Raymond D. Jones, Managing Director, Dechert-Hampe & Co.

I'm in a minority but I think the "dollar menu" is a valuable marketing tool for McDonald's, to help it maintain a value image especially in tough economic times. The challenge is to rethink the components of the menu--maybe a double cheeseburger is no longer feasible for a buck, but a single cheeseburger still works. Maintaining some elements of the "dollar menu" as a low-margin traffic-builder and entry point is worth figuring out, especially if McDonald's finds other ways to squeeze margin out of its menu by tweaking the price points of its higher-priced offerings.

Richard Seesel, Principal, Retailing In Focus LLC

As ingredient prices and transportation costs rise, McDonald's will be forced to raise prices. This is good and bad news for consumers. They will be forced to pay more than $1 for items that used to be on the dollar menu, but it will allow McD to offer a wider variety of items priced between $1 and $2.

Max Goldberg, Founding Partner, The Radical Clarity Group

The dollar menu is a loss-leader--a practice that has been in effect forever by retailers. If McDonald's wants to make more margin, then raise prices on all the other non-burger items they have. No one will notice.

Michael L. Howatt, Retail and Shopper Insights Consultant, Ascension Growth & Innovation Strategies

I believe shoppers will quickly forget about the 1 dollar items and will quickly migrate to whatever the new "deal" is. As for sales being impacted? I don't believe it will make any difference to all those who insist on ordering a diet coke with their bacon double cheeseburger and super sized fries.

Marc Gordon, President, Fourword Marketing

I would agree that the key is to offer value and not have to sell at $1.00. They can be grateful their name isn't McDonald's Dollar Store. Those poor retailers are really getting squeezed.

So while the staggered value approach makes sense, the challenge, of course, will be marketing it. When someone says Dollar Values then you know exactly what that is. I'm not sure "Various Price Point Values" has the same ring.

Doug Fleener, President and Managing Partner, Dynamic Experiences Group

Arby's $1 menu is now 5 items for $6. The portions and selections are still the same.

You can take someone with you and share the five items. I like that.

McDonald's needs to sort out what price point it wants to offer and back it with advertising.

Wendy's has all but abandoned its value menu, with most items at $1.49. And somehow, they managed to make these items even less tasty. A big thumbs down to Wendy's. Gosh, their single is so expensive, I have given up on them.

On the other hand, McDonald's can pull this off with an advertising blitz. At the right price and the right selection, they can succeed.

But I am afraid you just can't get any food items for a buck anymore at your local fast food restaurant. A sign of these bad inflationary times.

'weo'

McD's should go for higher priced greater quality. The fact is, food costs; commodity costs are the highest they have been for a long time and the customer will have to pay. I cannot imagine a customer turning to another non McD's alternative in the face of a 40-50 cent price hike, especially if it is sold well. The one dollar burger where I live is so skinny there cannot be much more to challenge!

Steve Bramhall, Managing Director, SB Purchasing

The demand for items on the Dollar menu will not be significantly impacted even if they were to increase the price to say, $2. The dollar menu is ridiculously cheap now and hasn't kept up with inflation.

This is simple economics, I don't think it is even worth McDonald's time to study the impact, increase the price to $1.50 and provide a "3 for $4.00" deal or whatever multiple raises their average ring to a suitable level.

Charles P. Walsh, President, OmniQuest Resources, Inc

I think there is some power in a value menu for $1.00. It's a magic price. They need to either keep it or replace it with something equally compelling, like Arby's 5 for $5.95.

Michael Murphy, Ph.D., Director of Analysis, Decision Insight

Woolworth's had the same problem--admittedly not the happiest example--and slowly (and quietly) moved away from a round price fetish; MickyD's has the same choice: either it can raise the price point (i.e. the $2 meal) or it can White Castleize the size of its hamburgers...both ideas have risks (as does doing nothing.)

'notcom'

It is an issue of vision and value proposition. Regarding value, it's better to narrow the offering than downgrade your product. There is also an opportunity to create a second tier value.

The broader issue is vision. When are merchants going to learn not to tie a brand to a moving target? Inflation isn't new and McDonald's should have shed itself of the dollar benchmark years ago.

Christopher P. Ramey, President, Affluent Insights

Kevin Graff has the right idea: offer some add-ons. Why not beer? The margin is excellent. Dropping the dollar menu just creates opportunity for the competition. Taco Bell originated the dollar menu and it revitalized the company.

Mark Lilien, Consultant, Retail Technology Group

Upgrading to a $1.49 or $1.99 deal seems more feasible, but still affordable. I'd also like to see more healthy alternatives for kids and adults. There is room for improvement here.

Odonna Mathews, President, Odonna Mathews Consulting