July 26, 2018

McDonald's to Push Hard on Value - NRN

From Nation's Restaurant News

"""But some franchisees have expressed concern about the deep discounting, according to a recent operator survey conducted by analyst Mark Kalinowski of Kalinowski Equity Research.

In the survey, which included input from 26 domestic franchisees with about 281 stores, franchisees seemed caught in a conundrum when it comes to the chain’s pricing strategy. Many said they are frustrated by the deep discounting but also complained about higher menu prices hurting guest counts.

“We’re worn out on the discounting. It no longer works,” one franchise stated in the Kalinowski survey. 

Yet, raising prices isn’t helping, either. “Can’t raise prices any more without destroying transaction counts,” one person said. 

Kalinowski said McDonald’s is challenged by “an industry that has trained the fast food customer to look for discounts.”

“Discounts, in a way, aren’t as special as they used to be,” he said.""" 

Entire article: McDonald's to push hard on value to step up sluggish guest counts

1 comment:

Anonymous said...

Discounting is not an effective long term marketing strategy. It is more effective in the short term only on our most profitable and popular products. When discounting programs are over customers feel like they are then being gouged. In the past the company used discounting in an attempt to control menu pricing in operator stores. A better strategy is to price products fairly and profitably. After borrowing and spending millions of dollars on EOTF and MRP's to then double down on discounting doesn't make business sense. Increasing top line sales is always a good goal but those increases must be profitable in an environment of constant reinvestments financed by borrowing. Discounting, IMO, should be limited to introducing new products and in holiday promotions. I don't think it is good for the company or the operators.