Folks rarely mistake McDonald's (NYSE:MCD) for Panera Bread (NASDAQ:PNRA.DL), but that may change come January as customers begin ordering a "pick two" -- or, more specifically, a McPick 2 -- at a Mickey D's near you.
McDonald's will be running a McPick 2 for $2 promotion through five weeks starting on Jan. 4, offering customers the ability to pair up their choice between a McDouble, McChicken, small fries, and an order of mozzarella sticks for two bucks. Local markets will then be able to decide if they want to extend the offering past Feb. 8.
Pairing up two items isn't original, of course. Panera has the You Pick Two. Schlotzsky's has the Pick2. However, in those cases, folks are paying up for the convenience of customization. Pair up half a sandwich and a cup of soup at Panera and you're still paying up $7 to $9. At McDonald's early next year, it will be all about milking more value out of the experience.
Some of these items are already part of the Dollar Menu & More value offerings, and it remains to be seen if McPick 2 will be the platform that weans customers off of the Dollar Menu that has infuriated franchisees in the past.
The time is right. Beef prices have fallen this year, making burgers less of a loss leader than they were a year ago. You'll also notice that beverages aren't on the promotional menu. McDonald's is banking on folks going for a high-margin drink in addition to the McPick 2 pairing.
McDonald's is starting to turn the corner. After posting negative stateside comps through most of the past two years, it finally came through in the third quarter with a 0.9% increase in comparable-store sales. That may not seem like much, but you have to go all the way back to the summer of 2013 to find the last time that its typical domestic store rang up more in sales than it did a year earlier.
The path to growth was easy before that. McDonald's was able to drum up sales by widening its menu offerings. It was able to get guests to spend more by adding premium chicken salads and the McCafe line of coffee and smoothies. It all proved to be a temporary fix. McDonald's lost its identity. The cheaper burger, fry, and shake standards were still on the menu, but service slowed as crews worked through the more complex variations.
McDonald's is now more in tune with its place in the fast-food food chain. It knows that it's the top dog in cheap eats. It's not going to compete with the gourmet burger chains or even the trendy ones like In-N-Out and Five Guys. As long as quality doesn't suffer, anything that it can do to improve its service and value proposition will only help it hold on to the positive comps that it barely registered in its latest quarter after a two-year drought. McPick 2 should do that.