An employee hands an order to a customer through a drive-thru window at a McDonald’s restaurant in Oakland, California, April 9, 2020.
David Paul Morris | Bloomberg | Getty Images
Independent advocacy group for McDonald’s franchisees are weighing in on the company’s upcoming value-dining promotion, cheering the affordability for the consumer but insisting that the company will contribute in the future to make the discounted offering sustainable for operators in the long run.
“The fact remains that in order to provide more affordable options to consumers, they must be available to owner/operators. “McDonald’s enormous resources and financial investment are crucial to any sustainable and affordable strategy,” the National Association of Landlords’ board wrote in a letter to the membership.
The letter calls McDonald’s business model “a penny profit business with margins of 10-15%” and states: “There is simply not enough profit at a 30% discount to make this model sustainable.” This requires a financial contribution from McDonald’s.”
Last week, CNBC reported that the $5 meal will appear on menu boards starting June 25 and will last for about a month. It will include a McChicken or McDouble, four-piece chicken nuggets, fries and a drink. The combination would be much smaller than purchasing these items separately.
The offer comes as lower-income consumers pull back from some restaurants amid persistent inflation and as brands look to offer more value to customers.
She informed CNBC Coca cola added marketing funds to make the deal more attractive to McDonald’s and its franchisees after an initial proposal failed to clear internal hurdles. In a statement last week, Coca-Cola said: “We routinely work with our customers on marketing programs designed to meet consumer needs. This helps us grow our businesses together.”
McDonald’s declined to comment on NOA’s letter to its members. In a statement to CNBC last week about Value Meal, the company said: “We know how much it means to our customers when McDonald’s offers significant value and communicates it through national advertising. This has been true since our inception and has never been more vital than it is today.”
The company previously noted that cash flow for U.S. franchisees has increased by an average of almost 50% since 2018. Even after adjusting for inflation, 2023 was one of the best years for franchisee cash flow in the company’s history, McDonald’s previously said.
In addition to the $5 promotion, the NOA letter suggests that the company should continue to innovate on the menu, bringing back items such as snack packs that operate existing chicken breasts, creating affordable options with lower food costs, making them more affordable for owners to sell.
The group also suggested taking two of the best drinks from McDonald’s spinoff chain, CosMc’s, and taking them to flagship locations to excite both customers and employees.
These ideas were initially raised by an advocacy group earlier in the year pushing for affordable options to be added to the menu without leaving out “staples and iconic” items.
“Lately [McDonald’s CEO Chris Kempczinski] made public comments about the growing need for affordability among U.S. consumers. This is not modern or unique news; value has always been at the heart of our brands,” NOA said in a letter to members seen by CNBC in February.
