McDonald’s reverts to dollar menu to build loyalty … say, what?

According to the WSJ


McDonald’s  reported a 3.5% decline in third-quarter earnings as sales slowed more dramatically than expected because of a sluggish economy and a disappointing marketing campaign.

McDonald’s … conceded that it needs to be more aggressive in advertising low prices.

In a weaker economy, customers may not go out to eat as frequently and tend to stop getting extras like drinks and desserts and premium items like Angus burgers, which all offer higher profits.

McDonald’s move earlier this year to shift its marketing focus in the U.S. to the higher-priced and more profitable “Extra Value Menu” from the successful “Dollar Menu” didn’t “resonate as strongly” with consumers.

“We’re going back to talk of the Dollar Menu.”

The company hopes that focusing attention to its lower prices will attract more customers and gain their loyalty.

This way, when the economy starts to improve, McDonald’s will have a larger consumer base and more ability to raise prices.

OK, I understand that low prices move burgers.

In fact, I think the McDouble for a buck is the best food value on the planet.

But, face it Mickey, low prices appeal to price-sensitive customers … not loyalists.

Trust me, when you try to jack the prices up, their (and my) “loyalty” will shift quickly to the new “value” burger joint.

Just ask Subway.

I’m sure they’ve been wondering “where’s Ken?” since they shifted from $5 Foot Longs to … a couple at $5, some at $5.50, some at $6.50, etc.

Let me repeat: you don’t build loyalty with bargain basement pricing … you just move a ton of burgers at low prices.

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