McDonald's Dollar Menu has been nothing short of a monumental success for the fast food
chain.
Or has it?
Here's the real history of this popular fast food marketing campaign - and all the problems
it's caused McDonald's​ over the years.
The Dollar Menu that people know and love today didn't come along until 2002, but its
earliest beginnings can be traced back to 1989.
That's when McDonald's launched its quote "Value" campaign, with select items at lower
permanent price points.
They were following the lead of competitors like Taco Bell and Wendy's, both of whom had
already premiered their own value menus.
"'Lotta delicious choices just 99 cents."
"Oh!"
"Who do you have to know to get a seat around here?"
The McDonald's Dollar Menu was also a response to a nationwide recession in the U.S., which
found the fast-food chain struggling well into the nineties.
"Dollar's down again."
"Oh, it's brutal."
"I know, it's feeble."
"It's dropping like a lead balloon."
"Tanking."
"It's just in freefall."
“It's pathetic."
"Hey big guy, what do you got there fella?"
Sales slumped again at the dawn of the new millennium, with stocks falling thirty-nine
percent over the course of a year.
McDonald's tried boosting sales by revisiting their quote "permanent discount" strategy,
this time offering select menu items for only a dollar.
The Dollar Menu was born, baby.
Customers love being able to grab a burger for a buck.
"No matter how much I change, I know I can count on McDonald's Dollar Menu."
But many franchisees just see The Dollar Menu as a way to lose money.
Once a franchise owner factors in food, paper, labor, rent, and the four percent service
fee they pay to McDonald's, it's pretty hard to make money off a one-dollar double cheeseburger.
There have also been complaints that The Dollar Menu kills incentive to buy pricier menu items.
After all, a Big Mac combo meal isn't so enticing when you can buy a double cheeseburger and
fries for two bucks.
In a 2014 restaurant feedback questionnaire, one franchisee wrote:
"We have twenty-five items on the Dollar Menu with breakfast and lunch...
Why would a customer order anything else?"
Making the Dollar Menu popular was never a problem, but making it profitable has proven
to be a challenge.
In 2012, there were reports that they'd be changing the Dollar Menu.
That same year, McDonald's net income fell from $1.51 billion dollars to $1.46 billion
dollars.
McDonald's tried persuading customers to order from its new, slightly more expensive Extra
Value Menu, but customers didn't respond well.
The next year, McDonald's tweaked the Dollar Menu to become the "Dollar Menu and More."
"Introducing the Dollar Menu and More, featuring all your classic hits and amazing new ones."
This version bumped up the cost of a McChicken to $1.69.
"Ah, the old double-cheeseburger for-an-eensy-weensy price trick."
Well, that one-dollar double cheeseburger was suddenly the not-so eensy-weensy price
of two dollars and nineteen cents.
Market researchers felt the move was a mistake, arguing that a Dollar Menu should only include
items for a dollar.
Makes sense to us.
McPick 2: Not so successful
"So you're here for the new McPick 2 menu."
"Indeed."
In late 2015, McDonald's announced the McPick 2 menu, no doubt trying to capitalize on the
success of their Dollar Menu glory days.
This "two for two dollars" deal let customers choose from a McDouble, a McChicken, small
fries, and mozzarella sticks.
At the time, CEO Steve Easterbrook said the restaurant was lacking an "equivalent form
of value" to the original Dollar Menu.
But two dollars just doesn't sound as appealing as one dollar, and McPick 2 didn't stand a
McChance.
The deal was all but dead before spring 2016, and McDonald's altered the menu to McPick
2 - for Five Dollars.
That's right, they went from two dollars to five dollars in just a few months, offering
items like the the Filet-O-Fish, and the Quarter Pounder burger, but there wasn't much to distinguish
the newer McPick 2 from the normal menu… same fast-food, different day.
Price war!
If fast-food history tells us anything, it's that the second you get comfortable, your
competitors move in for the kill.
After retiring the McPick 2 menu, McDonald's announced it was unveiling a new version of
the Dollar Menu in late 2017.
It would still feature items that cost a dollar, but there were also items for two and three
dollars.
"Enjoy more favorites on the 1-2-3 dollar menu at McDonald's."
Noticing McDonald's lack of a full-fledged, bonafide dollar menu, Taco Bell called them
out on it... by releasing their own "(Not) New One Dollar Menu" press release, which
pointed out that they'd been selling twenty items for one dollar apiece "for years."
Touché, Taco Bell.
Despite the fact that it wasn't exactly a full-fledged Dollar Menu, market analysts
predicted a two percent boost in sales for McDonald's that would be felt by other chains…
and it looks like those predictions were right on the money.
In the first three months after the new menu was introduced, McDonald's U.S. sales jumped
2.9 percent.
Meanwhile, competing chains scrambled to offer their own value menus, with Taco Bell launching
one-dollar Nacho Fries and Dunkin' Donuts unveiling their two-for-two-dollars breakfast
wrap.
Touché, McDonalds.