McDonald's Ready To Launch $5 Meal Deal: Everything You Need To Know

May 10, 202419:28 UTC

MCD

CMG

SBUX

Fast food giant McDonald’s Corp. MCD appears to be preparing the launch of a $5 meal deal as a value proposition to cash-squeezed customers despite its recent price increases.

What Happened: McDonald’s shares rose on Friday following a report from Bloomberg signaling the company was eying a launch of a $5 meal deal, citing an anonymous source. The deal may include items such as the McChicken or the McDouble, fries and a soft drink.

A prior attempt by McDonald’s to introduce the $5 deal failed earlier in the year after franchisees vetoed the promotion, according to the anonymous source. Franchise operators were reportedly concerned the deal could be unprofitable while wage hikes and store improvement costs hit locations.

McDonald’s new attempt was reported to enlist help from long-standing partner Coca-Cola Co KO. The beverage conglomerate would provide additional funds to the marketing campaign to soften the possible blow to franchisees.

Why It Matters: Customers of McDonald’s have long associated the brand with value. However, the company is currently faced with a predicament as low-income customers struggling to afford to pay the rising prices of items at the chain.

Menu prices of popular items at McDonald’s have increased 100% since 2014, according to a study by Finance Buzz. This rapid increase outpaced not only inflation but the increases at other chains such as Chipotle Mexican Grill, Inc. CMG and Starbucks Corp SBUX.

The $5 meal deal could give customers who might have avoided the chain a reason to return to the Golden Arches.

MCD Price Action: Shares of McDonald’s jumped 2.6% shortly after the report and is currently trading at $273.84 at the time of publication on Friday.

Photo: nlinnlin via Shutterstock.