It was only in March that McDonald’s revamped its Dollar Menu, removing fries and drinks for a buck with the hopes of getting diners to drop more money on each visit. Now, amid struggling sales, McDonald's is tweaking its Dollar Menu for the second time this year—and this time, $1 items are being added, not taken away.
A month ago, McDonald’s announced that comparable in-store sales decreased 1.8% globally and 2.2% in the U.S. in October. It was the first time since 2003 that such sales declined.
So it should come as little surprise that McDonald’s is shaking things up bit. Lately, news has spread that McDonald’s will be trying to win back customers by pumping up its Dollar Menu with new sandwiches and snacks. A Grilled Onion Cheddar Burger—a smaller, bacon-free version of a limited-time premium burger—will be selling for $1 by year’s end. Fish McBites, a snack akin to popcorn chicken only with fish, will arrive soon after, also for $1.
What’s particularly interesting is that McDonald’s feels compelled to pump up the Dollar Menu at the same time that low and mid-tier restaurant chains are pushing for much pricier selling points. Lately, Starbucks is selling $7 coffee, the “better burger” movement is placing an emphasis on upscale, higher-priced fare, and the higher-quality “fast casual” approach exhibited most obviously by Chipotle is being applied to restaurants specializing in everything from pizza to grilled cheese.
While McDonald’s franchises agreed to add the new burger and fish snack to their Dollar Menus, they refused to get on board with a plan that would have dropped the price of regular hamburgers and cheeseburgers to 69¢ and 89¢, respectively. Even as things stand, the presence of a robust Dollar Menu would seem to hurt sales of many other menu items, pricier “premium” sandwiches in particular. As Richard Adams, a former McDonald’s franchisee and current consultant with the Franchise Equity Group, explained things to Nation’s Restaurant News:
“Who would pay $4.79 for a sandwich when the two sandwiches on the Dollar Menu are perfectly good?” he said. “It’s just the math. The more you raise prices, the more you encourage people to buy off the Dollar Menu.”
Other industry experts also question McDonald’s overuse of the Dollar Menu. Per a Bloomberg News story about how McDonald’s is “Starved for Ideas” and is losing business to Burger King:
“First and foremost, they need to maybe tone down the Dollar Menu,” said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina, which owned 22,132 shares of McDonald’s as of Sept. 30. “You can get a double cheeseburger for $1 — why do you want a Quarter Pounder for $3?”
The Dollar Menu isn’t the only well that McDonald’s is going back to in the hopes of boosting diner visits. In September, word leaked that the McRib—the barbecue pork sandwich with a fanatical following at least partly because it only surfaces periodically on the menu—will again show up in McDonald’s restaurants at the end of 2012.
While observers in Michigan and elsewhere have resorted to speculation as to exactly when the McRib might start appearing locally, “lucky” diners in parts of Kansas, Missouri, and Texas have been able to order McRibs for weeks. Don’t go expecting the McRib to pop up on the Dollar Menu anytime soon, however—not when the sandwich has its own Facebook page.