An employee delivers an order to a customer through the ordering window at a McDonald's restaurant in Oakland, California, on April 9, 2020.
David Paul Morris | Bloomberg | Getty Images
Independent advocacy group McDonald's Franchisees are considering the company's upcoming Value Meals promotion, encouraging consumer affordability, but are pushing for future contributions from the company to make the discounted offering sustainable for operators in the long term.
“The fact remains that in order to provide the consumer with more affordable options, they must be accessible to owner/operators. McDonald's' vast resources and financial investments are essential to any sustainable and affordable strategy,” the National Owners Association's board of directors wrote in a letter to the membership.
The letter describes McDonald's business model as a “minimal profit-making business, with margins between 10 and 15 percent,” and says, “There is simply not enough profit for a 30 percent discount for this model to be sustainable. It requires a financial contribution from McDonald's.”
CNBC reported last week that the $5 meal will hit menu boards starting June 25 and last for about a month. The meal will include a McChicken or McDouble, four chicken nuggets, French fries, and a drink. The combo will be much cheaper than purchasing those items individually.
The offer comes as lower-income consumers withdraw from some restaurants in the face of stubborn inflation, and brands look to offer greater value to customers.
CNBC reported coca cola It added marketing money to make the deal more attractive to McDonald's and its franchisees after the initial proposal did not clear internal hurdles. “We routinely partner with our customers on marketing programs to meet consumer needs. This helps us grow our business together,” Coca-Cola said in a statement last week.
McDonald's declined to comment on NOA's letter to its members. In a statement to CNBC last week about the value meal, the company said: “We know how important it is for McDonald's to offer our customers meaningful value and communicate it through national advertising. This has been true since our inception and has never been more important than it is today.”
The company previously noted that U.S. franchisees' cash flows were up nearly 50% on average since 2018. Even when accounting for inflation, 2023 was one of the best years for franchisees' cash flow in the company's history, McDonald's previously said.
In addition to the $5 promotion, the NOA letter goes on to suggest that the company should continue to innovate on the menu, bringing back items like snack wraps that use existing chicken breasts, and creating more affordable options with lower food costs so they are more affordable for owners. He sells.
The group also proposed taking McDonald's two top beverages, CosMc's, and bringing them to key locations as a way to impress customers and employees.
These ideas were initially floated by the advocacy group earlier in the year, which pushed to add more affordable options to the menu without discounting “essential and premium” items.
“(McDonald's CEO Chris Kempczinski) recently 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 On CNBC in February.
