McDonald’s sees value as the only way to get people in restaurants right now, reports Annie Gasparro at The Wall Street Journal.
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 WSJ.
The company even added a fancy new item to its Dollar Menu: a cheddar, bacon, onion burger.
CEO Don Thompson had previously warned that profit growth was slowing because the chain “sacrifices margin in order to better compete for cost-conscious customers,” according to Gasparro.
Many Americans are concerned about the payroll tax increase, higher gas prices, and relatively high unemployment.
That means that fast-food chains have to use dollar menus to drive customers in stores.
“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.”
McDonald’s competitors Burger King and Wendy’s are also focusing on dollar menus.
The value menus are a “necessary evil” in today’s economy, Darren Tristano, executive vice president at consultancy Technomic, told the Chicago Tribune.
“The three big burger chains would have to collude to end burgers for $1, he said, because ‘if one stopped, the others would gain that business,'” the Tribune reported.
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