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- McDonald's reportedly plans to launch a limited-time $5 meal.
- In first-quarter earnings, the company's leadership highlighted how inflation has affected customers.
- Other fast food chains are also worried about affordability.
McDonald's is looking to launch a $5 meal in the US in a move to bring back price-sensitive customers.
The meal includes four items, people familiar with the matter told Bloomberg and Restaurant Business. Customers would choose between two of the chain's signature burgers — a McChicken or a McDouble — and get four-piece McNuggets, fries, and a drink. The $5 promotion would last for a month, Bloomberg reported.
It's unclear when the promotion would start and if it would apply to the entire US or other geographies.
The discussions about the new deal come two weeks after the fast food giant's first-quarter earnings call, where leadership highlighted how customers are increasingly price-sensitive.
"I think affordability is clearly an area where consumer expectations are heightened," McDonald's chief financial officer Ian Borden said on the call. "Obviously, they're getting hit," by inflation, he added.
The company previewed a value meal on the earnings call without any specifics. CEO Chris Kempczinski said McDonald's has local value meals around the US, but no standard national offering like competitors do.
A $5 meal would be a stark drop from current prices, especially in higher-cost cities, according to a Business Insider analysis.
A meal consisting of the same four items — a McChicken, fries, a drink, and four-piece chicken nuggets — costs $18.26 in downtown New York City. In downtown San Francisco, the McChicken version costs $16.15, and the burger variant costs $17.75.
The new bundle would be priced lower than a Happy Meal, which starts at $6.39 in downtown Manhattan.
The company's stock has fallen about 7% year-to-date as investors worry about rising costs and intensifying fast-food competition.
Fast-food chains across the US are grappling with fewer orders from customers who no longer find their meals affordable. Wendy's, Shake Shack, Starbucks and Burger King parent Restaurant Brands International have all said in their latest earnings call that they will exercise caution on prices.
"We're going to stay careful on pricing," Gunther Plosch, Wendy's CFO, said in its earnings call earlier this month. "I don't think we're going to get too greedy."
Fast-food giants have also been hit by California's new minimum $20 hourly wage for limited-service restaurants. Franchisees that have raised prices are worried they may lose customers to sit-in dining chains like Chili's and Applebee's, which are not subject to the wage hike.
McDonald's did not respond to an immediate request for comment sent outside standard business hours.