McDonald's Corp. (NYSE:MCD) is set to launch a new $5 meal deal, intensifying the ongoing price war among U.S. fast-food chains.
What Happened: McDonald's is introducing a $5 meal deal, which includes a McDouble cheeseburger, small fries, four-piece chicken nuggets, and a small soft drink, reported Bloomberg on Friday. The promotion is set to begin on Jun. 25, as the company aims to entice customers who have cut back on fast food due to rising prices.
"We're committed to winning the value war," said Joe Erlinger, president of McDonald's U.S.
Competitors have already responded to McDonald's plans. Burger King (NYSE:QSR) pledged to roll out its $5 value meal before McDonald's, while Wendy's Co. (NASDAQ:WEN) introduced a $3 breakfast offer and mocked its competitors on social media. Even Starbucks (NASDAQ:SBUX) announced a $6 breakfast sandwich and coffee combo.
Erlinger, however, is not concerned about the competition. He believes McDonald's size and marketing muscle give the company an edge over smaller rivals and the ability to minimize any impact on franchisee profits.
Despite the promotion, some franchisees are concerned about customers trading down from pricier options, like the $9 Big Mac combo.
Why It Matters: McDonald's has been under scrutiny for its price increases. The menu has seen historic price hikes of more than 200% in some cases over the past decade. This has led to criticism from customers and a decrease in fast-food consumption, even among traditionally loyal customers.
McDonald's also recently lost the trademark rights to its chicken-based Big Mac in the European Union. The company's decision to end a drive-thru AI test also suggests that the fast-food giant is adapting to changing consumer demands.
Price Action: McDonald's Corp's stock closed at $253.80 on Thursday, up 1.20% for the day. In pre-market trading, the stock remained unchanged. Year to date, McDonald's stock has declined by 14.56%, according to the data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote