A McDonalds located on Santa Monica Blvd in Los Angeles, California on April 1, 2024.
Robert Gauthier | Los Angeles Times | fake images
McDonald's is working to introduce a value meal in U.S. stores to help offset an increasingly challenging environment for consumers, two people familiar with the matter told CNBC.
People said the $5 meal could include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. Bloomberg News first reported on the budget meal.
The potential new offering comes at a time when low-income consumers are starting to cut back on spending, particularly on fast food brands. Mentions of low-income consumers in company earnings calls are at their highest levels in nearly two years, according to Bank of America data. McDonald's executives Wendy's to Dave and Buster We have all noticed the moderation in spending.
McDonald's recently reported a mixed first quarter, with U.S. comparable sales slightly below expectations. Higher prices helped boost average checks, but some consumers pulled back as a result of higher costs.
“Consumers continue to be even more demanding with every dollar they spend as they face high prices on their daily spending, which is putting pressure on the [quick-service restaurant] industry,” CEO Chris Kempczinski said on the company's April 30 earnings conference call.
He added that McDonald's needs to be “focused” on affordability to attract diners.
On the call, Kempczinski said the company is working on a domestic value deal 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 locations and have a say in such offers, often disagree over promotions that could affect 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 Coca Cola added marketing funds to the equation to make the deal more attractive.
McDonald's declined to comment to CNBC. Coca-Cola did not immediately respond to a request for comment.
— CNBC's Amelia Lucas contributed to this article.
