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McDonald's and Burger King Battle for Budget-Friendly Meal Deals

Quiver Editor

McDonald's (MCD) will roll out its $5 meal deal from June 25 for a limited time at some restaurants across the U.S., the burger giant said on Thursday, as fast-food chains ramp up cost-friendly options to boost spending among lower-income groups.

Restaurant Brands (QSR) International-owned rival, Burger King, is also considering a $5 "Your Way deal" as companies turn to improved offers and promotions to counter inflation-hit customers who are increasingly opting to eat at home. McDonald's value deal will include a McDouble or McChicken sandwich, small fries, four-piece Chicken McNuggets, and a small soft drink for $5.

Market Overview:
  • McDonald's launches $5 meal deal to attract budget-conscious customers.
  • Burger King is also considering a similar $5 deal.
  • Fast-food chains aim to counteract inflation by offering value meals.
Key Points:
  • McDouble meal options may be priced higher in certain locations.
  • McDonald's brings back "Free Fries Friday" promotion through 2024.
  • Promotions fueled sales at Domino's Pizza (DPZ) in the latest quarter.
Looking Ahead:
  • Fast-food chains need to balance value deals with rising commodity costs.
  • Lower-income groups are increasingly choosing to eat at home.
  • Retailers like Target, Walmart, and Kroger are keeping prices low to attract customers.

Picky spending hurt performance at McDonald's and KFC parent Yum Brands in the latest reported quarter, whereas promotions fueled sales at Domino's Pizza. Disposable income among the lower-income groups in the U.S. is declining while menu prices have risen across the food industry over the past year as companies tried to mitigate higher commodity and supply chain costs.

Late May, McDonald's USA President Joe Erlinger denounced in an open letter viral reports of runaway Big Mac prices as painting an inaccurate picture of the company. Meanwhile, the pivot to eating at home has been accelerated by major retailers such as Target (TGT), Walmart (WMT), and Kroger (KR) keeping prices on everyday essentials low.

About the Author

David Love is an editor at Quiver Quantitative, with a focus on global markets and breaking news. Prior to joining Quiver, David was the CEO of Winter Haven Capital.

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