Please ensure Javascript is enabled for purposes of website accessibility

The New Dollar Menu at McDonald's Isn't the Same

By John Maxfield - Dec 15, 2013 at 4:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

At the beginning of November, McDonald's ended the "Dollar Menu," which had been in existence for more than a decade. With a full month's worth of sales under its belt since the change, McDonald's may now be starting to realize the mistake it made.

Source: McDonald's.

Of all the innovations to come about over the past decade, the "Dollar Menu" at McDonald's (MCD 1.75%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
$238.00 (1.75%) $4.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.