Cheap menu items undoubtedly draw in fast food diners. Yet many fast food franchises would like dollar menu deals to disappear anyway.
Fast food franchises have long had a love-hate relationship with dollar menus and other cheapie promotions. Naturally, owners love any deals that drive traffic into their restaurants. Yet as far back as 2007 (per MarketWatch), restaurant owners griped about being forced to sell “loss leaders” such as the McDonald's Double Cheeseburger for just $1. Among other things, the presence of robust dollar menu selections is seen as a prime reason that fast food sales of combo meals have slowed, as have sales of other items that are far more profitable than stuff selling for merely a buck.
Over the years, the biggest players in fast food have regularly tweaked selections at the low-price end of menus with the hopes of wooing frugal customers and maintaining healthy profits. They’ve added new items and gotten rid of others. They’ve cut the sizes of shakes, fries, and such in order to keep prices set at $1 and not give away the store. More recently, they’ve added a second tier of “value” items” priced at $2 or more, in addition to other options still priced at $1. Wendy’s is calling its revamped value selections the “Right Price Right Size Menu,” while McDonald’s went with the name “Dollar Menu & More.”
No matter if these options cost $1, $2, or $5 in restaurants, they have one thing in common: A Lot of fast food franchise owners hate they’re required to sell them at such low prices.
Not only do sales of these items bring little to no profits, their existence seems to kill sales of pricier, more profitable options, and it’s difficult for restaurants to keep up with the number and variety of “value” selections they’re forced to sell. Janney Montgomery Scott restaurant analyst Mark Kalinowski recently compiled the comments of McDonald’s franchise owners in a survey, and it is littered with complaints about the onerous, profit-killing new menu. “Only thing we are advertising is Dollar Menu & More,” one owner griped, according to Burger Business. “We have 25 items on the Dollar Menu with breakfast and lunch. Why would a customer order anything else? Can get a beef, chicken, potato, soda, or coffee. It kills service time with orders of 2-3 sandwiches at a time. Cannot hit service times.”
“There is no way to make all those $1 or $2 sandwiches fast,” another operator explained. “We could do it when it was just the McDouble and the McChicken. But now with 25 total items, no. If you add crew it doesn’t cover the cost to make all the Dollar Menu crap.”
“The Dollar Menu & More is not helping sales but rather hurting sales if anything,” yet another owner-operator said. “We are selling far more Dollar Menu & More sandwiches, and [fewer and fewer] large sandwiches.”
In related news, according to the Janney survey, franchisees are also extraordinarily pessimistic about how their businesses will fare over the next six or so months. On a scale of 1 to 5, “Respondents produced an average score of 1.89, between ‘poor’ and ‘fair’ — the lowest score Janney has ever recorded and well below the 2.9 average rating over the entire history of the survey,” Nation’s Restaurant News summed up.