MCDONALD’S COMPETITORS COULD HAVE TROUBLE MEETING THE CHAIN’S PRICING STRATEGY. PHOTO COURTESY OF MCDONALD’S
generates nearly twice the unit volumes of its nearest competitors. There remain some questions about McDonald’s pricing effort. For instance, does the 15% discount on the price of the combo items individually include $1 soft drinks? There are some concerns that operators may have to provide this discount on already- discounted items. And costs aren’t exactly easing. Much of the reason fast-food prices are that high is because franchisees are paying higher costs. They’re paying $20 wages in California. Real estate costs and their associated lease rates are soaring. Insurance costs, digital costs, construction costs, lending rates are all increasing. The Extra Value Meals in particular are a discount. McDonald’s will be pricing its Big Mac combo meal at $8 starting in September, a more-than 18% discount on its national average price. But those higher-priced markets would be giving out a massive, 31% break on the cost of that combo. We get why McDonald’s is doing this. Because the price of many of these combo meals is over $10, and because chains like Chili’s are marketing against those prices, the company needs to regain the value reputation it had lost a long time ago. But this still means a value war that’s been raging for more than a year will continue through the end of 2025 and probably longer, absent some major change in the economy. And while the company and its operators have the wherewithal to withstand this, not everybody does.
AVERAGE PRICES FOR MEDIUM FAST-FOOD BUNDLES The national average price for medium-sized, premium-item bundled meals for the four largest burger-centric fast-food chains. Prices vary widely by region, and the burgers featured vary in cost based on ingredients. The inclusion of bacon on Wendy’s Baconator drives up the cost of that burger. While McDonald’s has had sales and traffic challenges over the past couple of years, it remains in a more stable situation than any of its competitors right now. Burger King remains in the early innings of a multi-year comeback and it’s not that far removed from a mass closure event. Wendy’s CEO just left the company to return to the consumer packaged goods industry. Jack in the Box just named a new CEO. Both chains’ same-store sales fell badly last quarter. None of them have McDonald’s average unit volumes. Consider these numbers: FAST-FOOD BURGER CHAIN AVERAGE-UNIT VOLUMES The average-unit volumes for the four largest quick-service burger chains. McDonald’s
OCTOBER 2025 RESTAURANT BUSINESS
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