McDonald’s same store sales increased by 6% last quarter. The restaurant chain says its renewed focus on low prices drove that success. Annie Gasparro writes:
”We know that customers motivated primarily by value and deals come more often and spend more,” McDonald’s Chief Executive Steve Easterbrook said on a conference call with analysts.
McDonald’s began revamping its value menu in the U.S. after realizing that it had been losing customers in recent years to rivals serving cheaper food rather than higher-end fast-casual restaurants it had been trying to emulate with healthier and upscale items.
In recent months, its $1 drinks and promotions to pick two items for $5 in certain markets helped boost sales, and McDonald’s is planning to start a nationwide value menu in 2018.
Over the last several years since discontinuing the Dollar Menu, “we weren’t as competitive as we needed to be on value,” said Chris Kempczinski, president of McDonald’s USA.
In the U.S., McDonald’s said it also benefited from the continued success of its premium, semi-customizable burgers and sandwiches, which are more expensive than a Big Mac, but cheaper than some higher-end burger chains like Five Guys. It is part of a high/low menu strategy it says it is employing to attract customers and maintain profit margins. In the latest quarter, its operating margin continued to expand.
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