McDonald's May Be Forced To Abandon The $1 Burger
Food inflation means that making money from $1 burgers is impossible, reports Leslie Patton at Bloomberg News.
The fast food chain is testing new value menus that include items with price points of $1.79 and $2, Patton writes.
McDonald's needs to start charging $1.50 or $2 for Dollar Menu items, Peter Saleh, an analyst at Telsey Advisory Group, told Bloomberg.Beef prices following a drought last year have put pressure on McDonald's earnings, according to Bloomberg.
McDonald's will have to tread carefully to keep price-conscious customers coming back.
The Big Mac (at an average price of $3.57) is too expensive for many Americans. Instead, McDonald's is promoting its $1 cheeseburger, fries, drinks and wraps, according to the Wall Street Journal.
"Value is critical right now," Lynne Collier, restaurant analyst at Sterne Agee, told WSJ. "The consumer is still very weak, facing higher gas prices, the payroll tax increase and employment barely inching up. Value is the No. 1 driver of traffic, and all these restaurant companies are dying for traffic."