McDonald’s has announced a new value meal for 2025 for as low as $5 along with a buy-one-get-one (BOGO) offer for only $1. The move is designed to lure value-conscious buyers to its stores as many consumers have been giving fast food a miss and instead been opting to eat at home as inflation persists.
Beginning January 7, McDonald’s will launch the new value platform, McValue across its restaurants in the US. “McValue will include current fan-favorites like the $5 Meal Deal, exclusive in-app offers, and local food and drink deals – plus, a brand-new Buy One, Add One for $1 offer on popular items for breakfast, lunch and dinner,” said the company in its release.
What’s In the New McDonald’s $5 Meal?
McDonald’s is enhancing its value offerings by extending the $5 meal deal and introducing a customizable platform that allows customers to tailor their meals. Customers can choose from a wide selection of items for just $1 after purchasing a full-priced menu item from the McValue menu. The $1 menu options vary between breakfast and lunch/dinner, ensuring diverse choices throughout the day.
“When it comes to value, we know there’s no one-size-fits-all. We’ve worked closely with our franchisees to create a new platform that will let our customers define value on their own terms,” said Joe Erlinger, President of McDonald’s USA.
Cory Watson, McDonald’s Owner/Operator and National Value Chair for 2025, added, “No matter the city or the state, customers consistently emphasize how important it is to enjoy their favorite meals at affordable prices.”
McDonald’s Has Stressed That Offering Value And Affordability Is Its Priority
McDonald’s introduction of a lower-priced value meal is far from unexpected. In its Q3 2024 earnings release on October 30, the company emphasized its commitment to delivering an exceptional experience, stating, “We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending.”
During the earnings call, CEO Chris Kempczinski acknowledged that while McDonald’s has long been recognized as a value leader in the industry, the company’s “value leadership gap has shrunk.” He highlighted various initiatives undertaken to enhance value across different regions and reaffirmed that “value and affordability will remain at the forefront of our conversations with markets around the world.”
Restaurants Have Been Launching Value Meals to Lure Customers
The US economy has shown robust growth, expanding at a rate of 2.8% in Q3, according to the advanced estimate. Additionally, inflation, as measured by the Consumer Price Index (CPI), increased at an annualized rate of 2.6% in October. These figures paint an optimistic picture of the world’s largest economy, with growth surpassing the trendline and inflation nearing the Federal Reserve's 2% target.
However, these positive headline numbers mask the financial struggles faced by many low- and middle-income families, where making ends meet remains a challenge. McDonald’s recent launch of a new value meal underscores the economic hardships that persist for a significant portion of the population.
Quick Service Restaurants (QSR) have been feeling the pressure, prompting other players to introduce similar value meal deals. Earlier this year, Wendy’s rolled out a “$3 breakfast deal” for a limited time. Currently, it offers another $3 breakfast deal, allowing customers to choose two items from options like Egg & Cheese English Muffin, Sausage & Cheese English Muffin, Small Seasoned Potatoes, Sausage Biscuit, Egg & Cheese Biscuit, and Medium Hot Coffee.
Value Meals Helped McDonald’s Post Better-Than-Expected Revenues in Q3
Value meals helped McDonald’s post a 3% rise in its Q3 revenue. Its same-store sales in the US – a key metric in the restaurant industry – also rose 0.3% during the quarter after having fallen in the previous quarter.
Separately, McDonald’s is also battling the fallout from the E. coli breakout which led to almost three dozen hospitalizations and one unfortunate death. During the Q3 earnings call, Kempczinski said, “While the situation appears to be contained, and though it didn’t affect Q3 numbers, it’s certainly an important development, which I know is on many of your minds.”
Food-Away-From-Home Prices Have Risen At a Mixed Pace
Food inflation remains a pressing issue in the US and worldwide, particularly as wages struggle to keep pace with rising prices. The statistics around food inflation offer some intriguing insights. According to the US Department of Agriculture, in 2022, food-at-home prices surged by 11.4%, while food-away-from-home prices rose by 7.7%. However, the dynamics shifted in 2023 as restaurants began passing higher food costs onto customers. That year, food-at-home prices increased by 5%, whereas food-away-from-home prices climbed by 7.1%.
In 2024, data from the Bureau of Labor Statistics reveals that food-away-from-home price increases have lagged behind those for food-at-home. Many consumers now perceive restaurant dining as overly expensive, even though inflation in this sector appears to be running below average food inflation rates this year. As a result, food chains have introduced value meals to entice customers to dine out.
However, these value meals often come with lower profit margins compared to full-price menu items, which can strain restaurant profitability. For instance, McDonald’s reported a decline in Q3 profits despite achieving a 3% year-over-year revenue increase.
Nevertheless, the prevailing sentiment suggests that dining out is becoming increasingly costly. In May, McDonald’s addressed claims that its prices had doubled. Joe Erlinger, President of McDonald’s USA, responded to these allegations, stating, “Recently, we have seen viral social posts and poorly sourced reports that McDonald’s has raised prices significantly beyond inflationary rates.” He dismissed these claims as “inaccurate” and clarified that the price increases were modest and primarily driven by supply chain challenges, higher food costs, and rising labor expenses.
Restaurants Are Using AI to Cut Costs
Amid slowing sales and lower profits, restaurant chains have been looking at multiple ways to improve their earnings. Wendy’s for instance has closed several underperforming stores. Food chains are also increasingly looking at artificial intelligence (AI) to cut down on costs. Restaurants are embracing AI in different business functions and Taco Bell is in the process of rolling out AI drive-through ordering to restaurants across the country.
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Last year, Wendy’s announced its AI drive-through named Wendy’s FreshAI in collaboration with Google Cloud. Earlier this year, it announced that it would spend $20 million on digital menu boards but the company clarified CEO Kirk Tanner’s comments during the Q4 2023 earnings call and said that it is not planning to have AI-based surge pricing.
However, the AI pivot would take its time to successfully play out for food companies. McDonald’s unsuccessfully tried its hand with what it called the “Automated Order Taker” which was an AI technology that it tested in partnership with IBM. In June, the company ended the trials and would now look at another vendor instead.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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