McDonald’s (MCD) is likely to continue offering a $5 value meal at most of its U.S. restaurants beyond the initial four-week period, Bloomberg News reported, citing an internal company memo. The promotion, which began on June 25, aims to attract budget-conscious customers. The $5 meal includes a choice between a McDouble burger or McChicken sandwich, a four-piece chicken McNuggets, small fries, and a small soft drink.
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According to the report, about 93% of McDonald’s locations will extend the deal past the initial four weeks, with some continuing through August.
Value Meals Boost MCD’s Customer Traffic
The report cites Tariq Hassan, McDonald’s Chief Marketing Officer (CMO), and Myra Doria, the company’s National Field President. They noted that early results show the $5 meal deal is successfully drawing customers back to McDonald’s, increasing guest counts, and playing a crucial role in sustaining growth.
According to the memo, McDonald’s plans to enhance affordability throughout the year. This includes potentially extending the meal deal and considering longer hours of operation to capture demand during off-peak times.
Value Meals Are Making a Comeback
High inflation over the past two years has heavily impacted consumers. Generally, fast-food chains benefit during such times as people seek out more affordable meal options. However, full-service restaurants and grocers are now emphasizing their value, price, experience, and quality to compete with fast food.
In response, fast-food chains are gearing up for a value war. Earlier this year, KFC (YUM) introduced a $4.99 value meal featuring two pieces of chicken, a side of mashed potatoes and gravy, and a biscuit. Meanwhile, Burger King (QSR) brought back its $5 Your Way Meal.
Is McDonald’s Stock a Buy or Sell?
Analysts remain cautiously optimistic about MCD stock, with a Moderate Buy consensus rating based on 19 Buys and eight Holds.. Over the past year, MCD has declined by more than 10%, and the average MCD price target of $305.54 implies an upside potential of 18.3% from current levels.
