McDonald’s value deal yet to make significant impact on sales despite traffic bump

GLOBAL – The largest fast food chain in the world, McDonald’s broke a four-year streak with same-store sales reducing by 0.7% in the first half of 2024, despite a slight increase in traffic after the US$5 value deal was introduced in late June.

The value deal initially meant to lapse at the end of August, was extended to December.

Many fast food chains worldwide have struggled with declining demand owing to inflation cost pressures. The cost of ingredients and other raw materials have significantly increased in the past year, which has been translated to increased fast food prices.

Various QSR chains responded to this challenging market environment by rolling out temporary and permanent value deals to attract price-sensitive customers.

However, available data is mixed on whether McDonald’s US$5 value deal has been effective in enhancing, traffic, sales, and customer loyalty.

According to the chain, the value deal had yet to make a significant impact on same-store sales, despite showing an initial traffic bump in the first month after the value deal rollout on June 25.

The chain revealed that 25% of its customers ordered the US$5 value deal in the first four weeks following the rollout, compared to competitor Burger King, which recorded 10% of its customers ordering its US$5 value deal in the first four weeks of its rollout on June 10 according to M Science digital purchase data.

Available data also reveals the value deal has helped the chain bring back some of its lapsed customers.

The report also revealed 12% of the chain’s customers who purchased the value deal have not been to a single McDonald’s outlet in the past 12 months. An estimated 5% of customers who purchased the value deal had never purchased a McDonald’s meal.

McDonald’s CEO Chris Kempczinski reiterated the company still needs an international value platform in the chain’s Q2 2024 call. According to market analytics firm BTIG, the statement suggests the US$5 value deal is too narrow to attract significant same-store sales.

The CEO also reiterated a deliberate marketing strategy is required to attract customers and achieve desired same-store sales results.

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