McDonald's new $5 meal deal heats up fast-food wars

Driving the news: McDonald's confirmed Thursday that the limited-time $5 meal includes choice of a sandwich — either a McDouble or McChicken sandwich — small fries, four-piece Chicken McNuggets and a small soft drink.

• This follows last week's release of Burger King's $5 Your Way Meal and Starbucks' new Pairings Menu with discounts when getting select drinks and food items.
• McDonald's also announced it will have local app offers and "Free Fries Friday" through the end of 2024 with a nationwide app offer and $1 minimum purchase.

What they're saying: Neil Saunders, GlobalData managing director, recently told Axios that consumers really want everyday low prices over limited-time deals and offers.

• "McDonald's $5 meal is sensible, but it will only be offered for a limited time so it will not resolve perceptions that the chain has become very expensive," Saunders said.

Context: McDonald's is under pressure to bolster sales amid heightened attention to recent price hikes.

• In a rare open letter last month, McDonald's USA president Joe Erlinger said the assertion the chain has hiked its prices "significantly beyond inflationary rates" is "inaccurate."

• He bashed "viral social posts and poorly sourced reports" about price increases, while acknowledging the company has faced "inflationary pressures."
• Erlinger said "prices for many of our menu items have risen less than the rate of inflation — and remain well within the range of other quick service restaurants."

The big question: Is the value meal sustainable in a higher-cost environment?

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