An employee delivers an order to a customer through a drive-thru window at a McDonald's restaurant in Oakland, California, on April 9, 2020.
David Paul Morris | Bloomberg | fake images
An independent advocacy group McDonald's Franchisees are weighing in on the company's upcoming value meal promotion, encouraging affordability for the consumer but pushing for the company to make future contributions to make the discounted offering sustainable for operators in the long term.
“The fact is that to offer consumers more affordable options, they must be affordable to owner/operators. McDonald's vast resources and financial investment are essential to any affordable and sustainable strategy,” wrote the National Association of Owners in a letter to members.
The letter calls McDonald's business model a “penny profit business, with margins of 10 to 15%” and says: “There is simply not enough profit to discount 30% for this model to be sustainable. A McDonald's financial contribution.
CNBC reported last week that the $5 meal would hit menus starting June 25 and would last about a month. It will include a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. The combination would be substantially less than purchasing those items individually.
The offer comes as low-income consumers retreat from certain restaurants in the face of persistent inflation and brands look to offer greater value to customers.
CNBC reported Coca Cola had added marketing funds to make the deal more attractive to McDonald's and its franchisees after an initial proposal failed to overcome internal hurdles. In a statement last week, Coca-Cola said: “We routinely partner with our customers on marketing programs to meet consumer needs. This helps us grow our businesses together.”
McDonald's declined to comment on the NOA's letter to its members. In a statement to CNBC last week about value dining, the company said: “We know how much it means to our customers when McDonald's delivers significant value and communicates it through national advertising. That has been true since our inception and has never more important than it is today.”
The company has previously noted that cash flows for U.S. franchisees have increased nearly 50% on average since 2018. Even accounting for inflation, 2023 was one of the best years for franchisee cash flow in the company's history, McDonald's said previously.
Beyond the $5 promotion, the NOA letter goes on to suggest that the company should continue to innovate on the menu, bringing back items like sandwich wraps that use existing chicken breasts, creating affordable options with lower food costs to make them more affordable for owners. sell.
The group also suggested taking the two main drinks from the McDonald's spin-off chain, CosMc's, and bringing them to iconic locations as a way to excite both customers and employees.
These ideas were initially floated by the advocacy group earlier in the year, as it pushed to add affordable options to the menu without discounting “staple and iconic” items.
“Recently [McDonald’s CEO Chris Kempczinski] has made public comments about American consumers' growing need for affordability. This is not a new or unique message; “Value has always been at the core of our brands,” NOA said in a letter to members seen by CNBC in February.
