McDonald's is bringing back the Dollar Menu - and sparking a fast-food price war
- McDonald's "$1, $2, $3 menu" debuts on Thursday - but some locations are already serving the new value menu.
- The new take on the Dollar Menu means a roughly 15% price cut for customers.
- Other fast-food chains are also slashing prices and creating new deals to compete with McDonald's in the new year.
McDonald's is bringing back the Dollar Menu.
On Thursday, January 4, McDonald's is officially debuting the "$1 $2 $3 menu" - a new take on its iconic Dollar Menu. As of Tuesday, many of the chain's locations had already started serving and promoting the new value menu.
Credit Suisse found in "anecdotal pricing checks" that the $1, $2, $3 menu will result in a roughly 15% price reduction across the chain's the full menu.
Items including the sausage burrito, McChicken, cheeseburger, and soft drinks of all sizes will cost $1 with the new menu.
For $2, customers can order the Sausage McGriddle, 2-piece Buttermilk Crispy Tenders, Bacon McDouble, and small McCafé drinks. The Sausage McMuffin with Eggs, new Classic Chicken Sandwich, Triple Cheeseburger, and Happy Meals will cost $3.
Executives acknowledged that McDonald's has struggled to attract value-minded customers since killing the Dollar Menu in 2013. While the McPick 2 has helped drive sales over the past year, a new national $1 menu is a major move to win over customers looking for value.
McDonald's new menu has sparked a fast-food price war
The $1, $2, $3 menu could boost McDonald's sales by 2% - putting significant pressure on competitors, according to Credit Suisse analyst Jason West. West estimates the value menu will result in 0.4% "sales risk" for the average fast-food chain, according to a note sent to investors in December.
"We're all fighting this fight, and I don't think it's going to slow down," Jack in the Box's executive brand president, Frances Allen, told Business Insider.
According to Allan, 2018 will be "no less of a war" to win over value-centric customers than continuing fast-food battles to win over customers in a competitive environment.
Jack in the Box is rolling out new advertising to appeal to budget shoppers, focused on the $1 and $5 price points.
Subway debuted a revamped $5 footlong deal on Monday, with five sandwiches priced at $4.99. Del Taco relaunched its "Buck and Under" menu in late December. Taco Bell announced in December it is expanding its dollar menu with plans to roll out 20 $1 limited-time offerings throughout 2018, in addition to the 20 $1 permanent menu items.
"Make no mistake, when the market leader starts to do things really well in different places, it just means you have to be that much more committed to your specific strategy," Taco Bell CEO Brian Niccol told Business Insider. "It's going to be more competitive [when McDonald's rolls out its new value menu], no doubt."