McDonald's US Sales Slump Sparks Overhaul of Value Playbook

McDonald's in the US is overhauling its value playbook due to its slowest sales growth in over a year and increased competition from Burger King. The fast-food giant has experienced a noticeable slump, with sales at established US restaurants increasing by just 0.8% last quarter. Consumer spending data tracked across US debit and credit cards showed domestic sales dropping outright through July and August.

The company's shares have slipped roughly 19% year-to-date through September 16. To win back price-sensitive customers, McDonald's is working with its US franchisees on a long-term strategy to revamp its affordability model. The overhaul comes after earlier attempts at value failed to stick, including a temporary $5 meal deal and a rollout of a 10-item menu priced under $3.

Management is launching an interim 'bridge plan' to stop the bleeding, which includes targeted digital promotions via its app, such as a $2 breakfast sandwich or free French fries with any $1 purchase. However, cheaper burgers are only half the battle, as McDonald's faces heat from Burger King's remodelled restaurants and aggressive marketing efforts.

To stand out, McDonald's wants to transform its American outlets into full-fledged dining destinations by elevating food quality, redesigning restaurants, and mandating staff to greet every guest. To give store teams room to adjust, the chain is pausing unannounced spot restaurant inspections through March 31 for certain franchisees.