Not even the dollar-drink specials on McDonald’s value menu are safe from the impact of inflation.
A number of McDonald’s franchisees are opting to ditch a longstanding promotion offering customers a cold drink of any size for $1 as they contend with decades-high inflation, according to a report. Some locations have already begun boosting the price of their drinks by “several dimes” to account for higher costs.
The McDonald’s operators are moving away from the $1 drinks special against the recommendation of the fast-food giant’s corporate wing, the Wall Street Journal reported, citing sources familiar with the matter.
So far, franchisees in 16 of McDonald’s 56 US markets have decided to focus their advertising blitz on value menu prices rather than the drink promotion.
The change highlights inflation’s debilitating impact on the bottom lines of major US companies. As The Wall Street Journal noted, the $1-per-drink price point was available throughout the Great Recession as well as most of the COVID-19 pandemic.
Earlier this year, McDonald’s reportedly informed its franchisees that the cost of food and paper products used in their restaurants would increase as much as 12% on an annualized basis.
The company is facing steeper costs for staple menu items such as beef as well as labor as it aims to maintain its workforce in a tight labor market.
Inflation rose by 8.6% in May, marking the fastest pace since December 1981, according to the Labor Department’s Consumer Price Index. The price of food away from home increased 7.4% in May compared to the same month one year earlier.
“Franchisees set prices and have the flexibility to create promotions that will drive demand locally,” McDonald’s said in a statement.
The Post has reached out to McDonald’s for further comment.
The report noted that dollar-drinks promotions are still offered in many US markets – and some locations that have nixed the deal occasionally offer it as a limited-time promotion.
McDonald’s corporate division purportedly informed restaurants in January that they were clear to suspend the drink deal if necessary. In May, the restaurants were told they could shift marketing efforts to focus on the overall value menu.
Overall, McDonald’s raised its prices about 8% during the first quarter compared to the previous year, company executives said in late April.
The company’s global comp sales rose 11.8% for the quarter, exceeding expectations despite the mounting financial pressure on American households.
Other major chains that hiked prices in recent months include Starbucks and Chipotle.
[Written in collaboration with other media outlets with information from the following sources]
