McDonald's says $18 Big Mac meal was an 'exception' and news reports overstated its price increases
Is a $5 Big Mac Deal McDonald's Inflation Fix?
McDonald's is addressing claims that its price increases are exaggerated, noting a reported $18 Big Mac meal in Connecticut as an outlier. The company states that the average U.S. price for a Big Mac has risen from $4.39 in 2019 to $5.29, a 20.5% increase, contrary to reports of doubling prices. Amidst rising costs for labor and materials, McDonald's overall menu prices have increased by 40% over five years. To address customer concerns over inflation, McDonald’s plans to launch a $5 meal deal next month.
What was the reported price of a Big Mac meal in Connecticut that McDonald’s labeled as an exception, and why was it considered an exception?
The reported price of a Big Mac meal in Connecticut that McDonald's labeled as an exception was $18. This price was considered an exception because it was significantly higher than the average U.S. price of a Big Mac meal, which includes a sandwich, fries, and a drink, and is currently $9.29. McDonald's U.S. President, Joe Erlinger, acknowledged that he and many franchisees were frustrated by the post about this meal, and emphasized that franchisees own and operate 95% of U.S. McDonald's locations and set their own pricing, but they work hard to minimize the impact of price increases.
How do franchisees influence the pricing at McDonald’s locations across the U.S.?
Franchisees play a significant role in influencing the pricing at McDonald's locations across the U.S. Since franchisees own and operate 95% of U.S. McDonald's locations, they have the authority to set their own prices for menu items. However, they work closely with the company to ensure that the impact of price increases is minimized for customers.
McDonald's utilizes a pricing strategy that takes into account various factors, such as local market conditions, competition, and customer preferences. This allows franchisees to adapt their pricing to best suit their specific location while maintaining the overall value perception of the brand.
Additionally, McDonald's provides its franchisees with a suite of proprietary pricing tools that help them evaluate pricing opportunities at an individual restaurant and menu item level5. This enables them to price at a level that customers will better accept, maximizing flow-through rates and leading to higher sales.
In summary, franchisees influence the pricing at McDonald's locations by setting their own prices based on local market conditions and using the pricing tools and strategies provided by the company to ensure affordability and value for customers3.