During a call with analysts earlier this week, McDonald's executives made a surprising announcement: the creation of a new $6 Classic Meal Deal. This new offering will be available in U.S. restaurants beginning on November 1.

And what, you might ask, is in a Classic Meal Deal?

According to McDonald's, the new combo will include a choice of one of four of McDonald's entrees: 100% fresh beef Quarter Pounder with Cheese, Big Mac, 10-piece Chicken McNuggets, or Filet-O-Fish. In addition to the entrée, you'll also get any size soft drink or sweet tea, a small bag of fries, and an apple pie or seasonal pie for dessert.

There are a couple of caveats on the deal: it will be available for a limited time and only at participating restaurants.

So, why this new offering? About a year ago, McDonald's announced the reintroduction of a revamped Dollar Menu featuring items sold at three different dollar-based price points: $1, $2, and $3. However, competitors -- including Pizza Hut, Taco Bell, Carl's Jr., Del Taco, and others -- have recently been pushing $5 meal combos.

McDonald's decided to do the competition one better -- pricing its new Classic Meal Deal at $6. According to McDonald's U.S. chief marketing officer, Morgan Flatley, the combo "enables us to attract different customer segments, ultimately driving traffic into our restaurants while protecting margin."

However, at $6, McDonald's may be pushing the limits of its base of budget-conscious customers. Says Tim Powell, a senior restaurant analyst at Chicago-based Q1 Consulting, "The positioning for McDonald's has always been location and consistency. I think this $6 jump is too much. I think they need to stick to what they're known for."

McDonald's has been busy this week announcing new menu items. Just a couple days ago, the company announced a major shakeup in its breakfast menu with the introduction of supersized Triple Breakfast Stacks. These new breakfast sandwiches also will appear in restaurants beginning on November 1.

Ultimately, time will tell whether or not these latest marketing moves will have the positive impact on the bottom line that the company hopes for. One thing is for sure -- the competition is heating up.

Published on: Oct 26, 2018
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