The Homa Files

Excerpted from WSJ: McDonald’s Tests Changes In $1 Burger As Costs Rise, 08-04-08

McDonald’s is testing modifications to its popular $1 double cheeseburger, and higher prices for the sandwich … selling it with one slice of cheese instead of two, and billing it as a “double hamburger with cheese ” …. or offering a double hamburger without (any) cheese …  or  selling the traditional double cheeseburger at prices ranging from $1.09 to $1.19.

Launched in 2003, the Dollar Menu has been a key driver of sales at McDonald’s 14,000 U.S. restaurants and has helped it ride out dips in consumer spending. But recently, franchisees have complained that the menu has brought too much unprofitable traffic into their restaurants.

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As of late June, sales of the chain’s lattes, cappuccinos and other espresso drinks were off their peak … lower-priced beverages, including $1.89 iced coffee and a $1 … sweet-tea promotion, have pulled some sales away from the espresso drinks … 

McDonald’s overall beverage expansion, adding espresso drinks, smoothies, cold tea, bottled drinks and ice-blended coffee beverages at U.S. locations, is on track to exceed the company’s goal of adding $125,000 a year in sales per restaurant … and adding $1 billion a year to the company’s sales.

http://online.wsj.com/article/SB121780568775808337.html?mod=2_1567_topbox

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Observations

1.  One way to increase price is to skinny back the product — put fewer cornflakes in the box.

2.  The $1 double cheeseburger is the heart of the menu — dropping it will be a big deal — no way I step up to $1.19 or buy a chesseburger with no cheese.

3.  Has the multi-dollar cup of coffee market peaked ?

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This entry was posted on August 4, 2008 at 9:53 am and is filed under Mktg - General, Mktg - Pricing, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.