MCD - NEGATIVE $ MENU POINT

According to a franchise consultant, one of McDonald’s largest Co-Ops in the country showed a $0.39 decline in breakfast average check for the first week of February with a 3.1% increase in breakfast sales and a 10.9% increase in TCs. 

 

The February data points are significant as they reflect the beginning of the national launch of the $1 menu at breakfast.  In the same Co-Op for the same period, “regular menu” sales were down 1.6%.  The regular menu accounts for 70%+ of total sales for McDonald’s US Business.  Considering this, and taking the Co-Op example cited above as representative of the wider system, a 3% increase at breakfast would not be enough to move the US business back into positive territory. 

McDonald’s has a big voice when it comes to marketing so with transactions up more than 10% at breakfast there will be other companies within the breakfast day part that will begin to suffer.  For starters, it will make it nearly impossible for WEN and BKC to take any significant market share at breakfast.  Neither company has the marketing muscle or the margins to afford to be competitive. 

 

Given the lessons learned from 2009, I do not think that a typical SBUX customer is going to make the switch to MCD; although Dunkin has responded to the new McDonald’s dollar menu.


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