McDonald’s (NYSE:MCD) love affair with Coca-Cola (NYSE:KO) continues, and this time, the companies are teaming up for a month-long marketing campaign to promote MCD’s value play: a $5 meal deal.
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MCD’s $5 Meal Value Play
McDonald’s has been looking to bring back its $5 meal deal at a time when inflation-battered consumers are staring at tightened household budgets. However, the plan met with skepticism from the company’s franchise owners, who are facing higher labor costs.
Now, Coca-Cola is stepping in to help franchisees cover some of the costs of the meal deal. MCD’s restaurants will offer a bundle of small fries, a small soft drink, a sandwich, and a four-piece Chicken McNuggets for $5. The promotion is set to kick off on June 25, according to the Wall Street Journal.
MCD’s advertising push is part of a broader industry trend of offering deals in hopes of boosting customer traffic. Coca-Cola is chipping in $4.6 million to subsidize expenses associated with the advertising campaign.
However, not all marketing blitzkriegs succeed. The backfiring of Red Lobster’s all-you-can-eat shrimp deal is a case in point. Additionally, the barrage of value and discount deals could weigh on the food industry as a whole. For MCD, the success of the $5 meal campaign will hinge on whether it can attract enough inflation-weary fast-food lovers to its outlets without impacting its margins.
Is McDonald’s Stock a Buy, Sell, or a Hold?
McDonald’s share price has declined by nearly 7% so far this year. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average MCD price target of $306.17.
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