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McDonald’s launches a $5 meal as Applebee’s and Chili’s swoop in on fast-food customers

McDonald’s tries to lure customers back with cheaper options.
/ Source: TODAY

Fast-food customers are tired of emptying their wallets, and several chains are taking note.

On May 10, CNBC reported the chain was getting ready to introduce a value meal in its American stores to combat customer fatigue over high fast-food prices. This would include a meal deal costing the relatively low price of $5. 

Later, on May 15, CNBC reported the low-cost meal will be introduced on June 25 and will run for about a month, according to “a person familiar with the offering who was not authorized to speak about it publicly.”

The $5 meal, first reported by Bloomberg, will include four items: a McChicken or McDouble, four-piece chicken nuggets, fries and a drink, according to a pair of sources familiar with the matter. 

The news comes as customers all over social media vent their frustration over the rising costs of fast food, with complaints around Filet O’ Fish, double cheeseburger and single hash brown prices driving them away.

On May 13, a report by Marketplace detailed the claims of an Uber Eats delivery driver who says a Pittsburgh, Pennsylvania, McDonald’s location charges customers for refills.

This comes after the chain announced in November 2023 that it was phasing out self-serve drink machines, although McDonald’s USA leaves the option of charging for refills at the discretion of individual restaurant franchisees.

Low-income consumers are also beginning to limit their spending at fast-food brands, with KFC, Starbucks and more reporting sales declines as a result.

Representatives for McDonald’s USA declined TODAY.com’s request for comment on a potential $5 meal deal, but did offer some insight into its perspective on value as a whole.

The company says its pricing is set by local franchisees and varies by restaurant, adding it already presents value offers like “Free Fry Fridays,” where customers can get a free medium fries with any $1 minimum purchase on its app, a deal currently running at participating restaurants through the end of the year. It also says McDonald’s Rewards gives folks exclusive offers and deals in their area. 

McDonald’s says 90% of its stateside franchisees are offering meal bundles for $4 or less — although, a check of several McDonald’s locations across four major U.S. cities reveals meal bundles priced at more than $4. 

According to personal finance website FinanceBuzz, McDonald’s menu prices have doubled since 2014 — the chain reportedly increased its prices 100% across its most popular items, the highest of any chain analyzed by the company.

Representatives for McDonald’s USA told TODAY.com that the findings published by FinanceBuzz do not give “an accurate representation of historical or current pricing at McDonald’s restaurants, and the 2024 average prices listed are significantly inflated.”

Additionally, a 2023 report from MoneyGeek found the price of a burger, fries and soda at McDonald’s rose 11.5% from 2021 to 2022, running customers around $6.19.

In contrast, during a Q1 2024 earnings call, McDonald’s CEO Chris Kempczinski said customers surveyed continue to say “McDonald’s offers delicious food at a great value,” but added the company “must be laser-focused on affordability,” looking toward good everyday price points.

“McDonald’s has a long history of being the go-to destination for value, and it’s imperative that we continue to keep affordability at the forefront for our customers,” he said during the call. “We literally wrote the playbook on value, and we are committed to upholding our leadership within the industry.”

Still, CNBC noted an initial proposal by McDonald’s for the $5 value meal did not clear necessary hurdles. Kempczinski said that teams are working closely with local McDonald’s franchisees to balance pricing decisions with their bottom line. 

In the midst of all this, fast casual chains are looking to score a piece of the low-priced pie. 

On May 11, John Peyton, CEO of Applebee’s parent company Dine Brands, told CNN that due to rising fast-food prices, lunch at Applebee’s has become an affordable, sit-down alternative to drive-through eateries. It’s taking that logic to potential customers.

“You can get our burger for $9.99,” Peyton told CNN, wondering why any customer would opt for a similarly priced drive-through burger instead. To him, the choice is clear.

Additionally Peyton tells TODAY.com’s that his company has been looking at consumer spending patterns and is prepared for consumer shift towards more value-focused purchases.

“To ensure we’re meeting our guests’ demands for great food at a great value, our brand teams have developed robust calendars of promotions at Applebee’s, IHOP, and Fuzzy’s Taco Shop, showcasing limited time offers and introducing new menu options for guests to enjoy, all while remaining profitable for our franchisees.” Peyton tells TODAY.com

Still, this comes as Applebee’s recently announced the upcoming closure of up to 35 of its U.S. restaurants along with a 4.6% decline in sales.

Chili’s is also attempting to move in on customers feeling the pinch of fast food costs, just in a more direct way.

“We see the complaints about fast food prices and Chili’s is here to provide some relief,” Kevin Hochman, Brinker International CEO, tells TODAY.com. He says the chain’s $10.99 3 For Me deal “just hits different.”

During a Q3 2024 earnings call, Hochman said the brand's social media team “has been watching the conversation” of pricing unfold.

“Through a series of hard-hitting and entertaining ads, we tap into that insight and use fast food as a foil to demonstrate Chili’s superior value,” he said.

On April 29, the chain announced its Big Smasher Burger, part of its 3 For Me menu. According to the chain, the burger has “twice the beef” of a Big Mac, plus “flavors fast food lovers will recognize.”

The burger features diced red onions, lettuce, pickles, Thousand Island dressing, American cheese and a nearly half-pound, hand-smashed burger patty. This item holds similarities to McDonald’s new-and-improved burger recipe, which the chain began rolling out in 2023.

Chili’s took the beef to an explicit level when it asked followers on X, if they “think Chili’s is better than fast food.” The chain offered to treat 300 people to 3 For Me meals if they replied on the platform.

And it’s not just the brands making the comparison between fast food and sit-down restaurants.

“i hate when my drive thru order is like $20-$30 because i could have just gone to chilis,” one X user wrote.

Chili’s response was nothing short of clairvoyant shade: “fast food is quaking.”