McDonald’s Corp. regards its Dollar Menu as a key part of its “Plan To Win” strategy, but there is growing discontent among franchisees that it’s also a way to lose money.
As the cost of food ingredients rise, the profit margin on the menu’s most popular item, the Double Cheeseburger, is shrinking to the point where some restaurants have taken the sandwich off their Dollar Menu and are charging more for it. A few other stores have abandoned most or all of the cheap-food lineup.
One franchisee called the hefty burger “a loss leader.” He calculated that after food, paper, labor, rent, other overhead, plus the 4% service fee he pays McDonald’s, the item isn’t profitable for him.
The Dollar Menu has become so contentious that the head of McDonald’s National Leadership Council of franchisees, Don Armstrong, recently disclosed in an email to colleagues “the desire to find a new value platform that will continue to bring customers in and maintain our competitive value leadership.
We hate the fact that the dollar menu/double cheese (burger) is the foundation” of that position, Armstrong wrote, “but the fact is it works. Everything else that has been tried has failed.”
The email said efforts are underway “to explore options and research consumers to find the right replacement strategy.
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