McDonald’s Launches Plan to Win Back Low-Income Customers

McDonald’s saw significant decreases in orders since the beginning of the year due to the increase in menu prices. The menu price hikes come as a direct result of the minimum wage increase in California as well as unprecedented inflation, which went into effect April 1st of this year. Now, McDonald’s is launching a plan to win back some of their lost customer base.

Source: WEBZ

McDonal’s CEO Chris Kempczinski announced that the fast food giant was “navigating transaction reductions” with their low-income customer base since February 2024. He spoke to how restaurant inflation continues to grow at a faster rate than grocery stores, encouraging more people to eat at home instead of eating out.

Source: Ian Borden/ LinkedIn

Their CFO Ian Borden added that McDonald’s would have a focus on affordability in 2024, seeing as the chain already pushed a 10% price increase in 2023. He stated, “Providing our customers with affordable options has always been core to our brand, and it’s even more important as consumers feel pressure on their spending, particularly the lower-income customer”.

Source: SheFinds

Recently however, McDonald’s made headlines for the shocking price of a Big Mac meal: $18! This left customers feeling upset and encouraged them to turn to other options for affordable food. McDonald’s hopes their new marketing strategy will help regain some of this customer base which they lost.

Source: OhMyMag

One of the initiatives that the fast food giant is putting forth is a bundling plan, which has a $4-and-below price point. Borden explained, “90% of our restaurants in the U.S. are offering bundles at breakfast or during the rest of the day at under a $4 price point. So, we’ve got really compelling affordability, but we haven’t been talking about it as actively yet”.

Source: PRNews

He also explained that McDonald’s plans to leverage its loyalty program by adding compelling offers to the 34 million active members. McDonald’s and many other fast food franchises have been forced to make difficult decisions to cut cost in the wake of the minimum wage hike in CA that occurred earlier this year.

Source: GoBank

In addition to menu price hikes, restaurants have had to do mass layoffs as well. California’s minimum wage increased by a whopping 25% as of April 1st, 2024. The $20 minimum wage was passed by Governor Newsom in an effort to allow fast food industry workers to earn a livable wage.

Source: The Week

However, this caused great fallout for consumers and many workers, who ended up paying the price. In addition to layoffs, many franchises are rolling out more mobile order kiosks to replace some of the workforce.

While McDonald’s and other fast food chains attempt to navigate inflation and dramatic minimum wage increases, consumers are left wondering if there will be any affordable fast food options left.