Blame unrelenting inflation over the years eating away at the profitability of selling a hamburger for a buck. Or simply, McDonald's execs realizing that to boost sagging U.S. sales, the fast-food chain has to sell higher-priced sandwiches to a wealthier clientele. Either way, there is almost no denying McDonald's is moving to vacate the dollar menu.
According to reports this week based on a company webcast with franchisees, McDonald's is introducing a host of mid-priced items to its menu that will cost between $1.50 and $3.00. A chicken sandwich and a double burger, both with lettuce and tomato, will go for around $1.50. The current versions of both items today usually cost about $1.19 to $1.39.
In addition to adding the new mid-priced sandwiches, McDonald's is also de-cluttering its drive-thru menu and expanding all-day breakfast nationwide after testing it in San Diego earlier this year, moves that have been widely expected.
The decision by McDonald's to de-emphasize the dollar menu should come as no surprise based on commonsense economics. Prices for items such as beef, poultry and produce, the key components to most of the dollar menu's sandwiches, have surged since the value-centric program launched in 2002. The upward trend in inflation has made selling items at a dollar less profitable for McDonald's franchisees.
"Are dollar menu items profitable? Yes, but are they as profitable as we'd like them to be? Not necessarily," said McDonald's franchisee Terry Shugart.