McDonald's Corporation (NYSE:MCD) is stepping back from the McPick 2 for $2 menu, the platform that was supposed to replace the Dollar Menu. The new value menu was seen by some analysts as a needed component for McDonald's to lure in budget-minded customers.
The fast-food chain has not yet made an announcement about the decision, but signage and advertising promoting a 2 for $5 menu have begun to appear in its place, and its website notes that the 2 for $2 promotion has ended. According to Consumerist, billboards and other such announcements have appeared in cities like Kansas City and Des Moines promoting the new 2 for $5 menu, which includes premium sandwiches like the Big Mac, Quarter Pounder, and chicken nuggets, unlike the 2 for $2 menu, which featured items like mozzarella sticks, small fries, and low-priced sandwiches like the McDouble.
Does it matter?
Surprisingly, the decision comes following positive remarks on the 2 for $2 menu in the company's recent earnings call. CEO Steve Easterbrook had said, "the offer appears to be resonating with customers," but the program was also in a test phase, and he said the company would make adjustments as it moves to a "more permanent national platform later this year."
The 2 for $2 menu also appeared to be a response to its fast food rivals like Wendy's (NASDAQ:WEN) and Burger King, a division of Restaurant Brands International (NYSE:QSR), which have been engaging in a race to the bottom with their own value meals. Wendy's rolled out a 4 for $4 menu last October, which includes a burger, chicken nuggets, fries, and a drink, while Burger King did it one step better with a 5 for $4 menu, offering the same mix but with a chocolate chip cookie to boot.
With its 2 for $5 menu, McDonald's seems to be targeting a similar price point as Wendy's and Burger King, but putting its premium sandwiches front and center instead of budget-priced offers.
Reaction on social media has been mixed with some cheering the move, while others said they would switch to one of the company's rivals.
McDonald's went from 2 for $2 to 2 for $5. Joke. I'll go to Wendy's where I can get 4 for $4. 🖕🏼😂— Miriam Watson (@Miramax7) February 21, 2016
While McDonald's could lose some value-oriented customers to its rivals, it could also benefit by adding sales and profits with a value meal that sells up rather than down and leads with its best known menu items. Expect some more color on this in McDonald's next earnings report.