Fast Food Chains Are Desperate to Kill the Dollar Menu

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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.”

(MORE: The Secret About (Not So) Secret Fast Food Restaurant Menus)

“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.

30 comments
DarkAges
DarkAges

The non-dollar items are too expensive. Put the premium choices at a price of $1.99 and watch them fly off the shelf. If you pay $7 for a sandwich, drink and fries you get a bun and Ketchup with HFCS, then the fries are mostly grease and salt and the drink is either loaded with sugar or aspartame. Buying a couple of 'dollar' items helps you avoid the fries and drinks. 

brettlosey
brettlosey

Here is the thing about Mcdonalds.  If I want a good fast food sandwich, there is no way I would eat there. I do go there for the $1.19 Mcdouble and $1 McChicken, but that is it.  Their more expensive sandwiches are basically the same thing with more bun.  I would completely prefer paying that $5 for a Hardee's burger or pretty much any place else's premium burger.

MichelleHeil
MichelleHeil

hey heres an idea, just eliminate the cheap things and serve the normal. Hardees is not cheap, but they stay in business. Arby's is not that cheap either. Me, i quit eating fast food so much, i get pizza maybe once a month but trying to eat at home more, saves money. 

sarah.johnson833
sarah.johnson833

Why would they want to pay more when the dollar menu tastes just as good if not better than their large sandwiches?  I think fast food for the most part sucks, so why would I want to waste my money on an overpriced combo meal?

rplivinitup
rplivinitup

just make your double cheeseburger out of soy. if you seriously sit down and eat a mcdonalds dbl cheeseburger and then eat a soy burger there is little to NO difference. you can still sell your product for one dollar AND you help our calorie intake while still feeling full. such a damn easy answer. make Toledo, Oh a test market. promise you it will do well. your welcome

garciaa528
garciaa528

you f#$%n losers who voted for barak and his job killing policies deserve all this and more

AndrewK777
AndrewK777

So what you are saying is that your customers are only buying the items that do not have ridiculous mark ups. Imagine that. 

jenniferherrera78
jenniferherrera78

What they are saying is no one is buying the exspensive food. That's because no one can afford it anymore. No one can get fast food since pay rates no longer increase and in ways employers are no longer investing in people so the people no longer invest in them. They are trying to force the already poor to pay up without options for thier budget. Expect to close up your doors then, because no one is going to buy their overpriced junk. I'd rather make my own salad at home then over spend my budget going out to eat and stay healthy.

BbqJoeHeslin
BbqJoeHeslin

The problem with dollar menus, is that it leads the public to think all dine out meals should be inexpensive. Try owning a real restaurant. Food isn't cheap.

LahnnaEpolito
LahnnaEpolito

Combo prices have increased in order to compensate for these "loss leaders".  The way I see it, if you want McDonald's or Wendy's, that is what you're going to get, regardless of the price.  


Loss leaders to drive traffic only work when you have some type of salesmanship to back it up and further increase the average dollar your patrons are spending.  It's the same in retail.  Big retailers sell loss leader products and then rely on their sales team to build on that.  That comes down to hiring standards, development, and compensation.  The fast food industry has never been a frontrunner in any of these departments.

BradleyRichardson
BradleyRichardson

In five years combo prices have gone up 125%. You can now go to Most chain restaurants and have a higher quality burger for 2$ more.

Flalora
Flalora

Even the franchise owners, classic small businessmen, are feeling the negative effects of corporate greed. Where will it end?

cheyenne.lin28
cheyenne.lin28

if they didn't sell at such low prices, would it still be fast food?

R.s.Rosenquist
R.s.Rosenquist

If they aren't able to make any money due to the Dollar Menu, perhaps they ought to sell their franchises.


What's that?  Oh, it's not like that at all...

DanielMoore1
DanielMoore1

People are broke. The middle class is no more. 

dutchs
dutchs

@rplivinitup Might work, but if they have to be labeled soy or vegetarian, most customers won't try them. If people are as strapped as many claim here, they won't waste money trying something they never heard of and might not like.

Yacko
Yacko

@rplivinitup An interesting point. There are several ways they could make vegetarian burgers, all of which are cheaper than beef. I myself make soymilk at home for a mere $1.30 a gallon. If somebody had a spine at McD, they would try this and like you, I'd bet it would be a winner.

WordCubed
WordCubed

@garciaa528 Business owners, does the strategic use of loss leaders have an impact on your logistics and profits? Blame Obama!

MartinHarvey
MartinHarvey

@AndrewK777 Ridiculous mark up? You mean a business needs to make a profit to stay in business? Gasp! You must have majored in moron.

JustinBeberIsMileyCyrus
JustinBeberIsMileyCyrus

@BbqJoeHeslin Actually yes, the ingredients they use are are fairly cheap.  Given same overhead costs (employees, buildings, advertising, etc) they are upset they are selling $1 burgers instead of $4 burgers that only cost them $1 more to make.  THERE is the problem, that maybe 30% of the bill goes toward ingredient cost but if you want a burger twice the size it still costs more than twice as much.  Consumers aren't THAT stupid, except for the rich ones who don't care because throwing away money makes them feel good.


Food really is cheap in comparison to "real restaurant" prices, particularly at places that like to give you rice, beans, fries, bread, etc, all of which cost mere pennies a serving.  Meat on the other hand, well you don't order a  $15 meal from McDonalds but a decent meat centric meal at most sit down restaurants is approaching that price point, even when it is chicken which bought in bulk may stay under $2/lb.

DenisWinkle
DenisWinkle

@BbqJoeHeslin

You don’t need to own a “real restaurant” to see what common folks can't afford today. In the money mongering that came to extort a restaurant. In the notion, that “Cheap Labor defines “competition” today! The Globalization in the devaluations of our living standards! You’re so right. Food isn't cheap in the profiteering that comes to exploit it on principal.

JustinBeberIsMileyCyrus
JustinBeberIsMileyCyrus

@MartinHarvey @AndrewK777 

If you think McDonalds is struggling rather than making money while operators whine about not making more, you'd be wrong.  If all a loss leader does is get someone to the drive thru and end up ordering fries or a soft drink then they made more profit than if that customer went somewhere else... but don't let facts get in the way of a habit to call people morons.