Of all the innovations to come about over the past decade, the "Dollar Menu" at McDonald's (NYSE:MCD) was far and away one of the most beloved by consumers. Assuming you didn't fall for the add-on trap -- "do you want fries with that?" -- it was your one true shot at getting the best of corporate America. And now, presumably for that reason, it's dead.
At the beginning of November, McDonald's officially ended the decade-long experiment. As you may know by now, the "Dollar Menu" didn't totally go away. It was rather replaced by something called the "Dollar Menu & More," what McDonald's describes as the "menu you love, plus so much more."
And to a certain extent, the company is right. While the $1 McDouble is a thing of the past -- it's now $1.25 at the location closest to me -- a greater selection of items was added to the menu.
The new BBQ Ranch Burger and Buffalo Ranch McChicken will be available for $1. That's in addition to recent staples such as the Grilled Onion Cheddar Burger and Fruit 'N Yogurt Parfait. For $2 each, customers can choose from the Bacon McDouble, Bacon Buffalo Ranch McChicken, or Bacon Cheddar McChicken. And the company is featuring its 20-piece McNuggets for $5.
Sure, these are still good deals. But for the truly value-conscious consumer, it's impossible to deny that there was something special about a menu that offered everything for just $1.
During a recent presentation to industry analysts, an executive in McDonald's domestic operations addressed the change:
If you think about the Dollar Menu as a platform, we instituted this back in 2003. It's been foundational to our business for over 10 years. In fact, we have evolved it. The change that we recently made was not the first change. We've evolved it a few times over the years. And every evolution was designed to make sure that we stay relevant with our customer base. So where we are right now is just a continuation of that evolution.
To be fair, the evolution was inevitable. Inflation causes food prices to increase every year. For the category that matters most to McDonald's -- that is, "food away from home" -- it's currently projected to be in the 2% to 3% range in the United States. This has steadily eaten into McDonald's margins over the years and begun to cause angst among franchisees.
But is McDonald's now regretting its decision to kill the original "Dollar Menu"? In November, the first full month without it, same-store sales fell by 0.8% in McDonald's U.S. division. As the company noted in a press release announcing the results, "Ongoing competitive activity and relatively flat industry traffic trends negatively affected performance."
Is this evidence of backlash, or are consumers still simply struggling under the weight of the ongoing economic malaise? That remains to be seen. But it isn't hard to imagine that many customers are hoping it will usher in a return of the true "Dollar Menu" they love.