McDonald's franchisee group applauds $5 meal and calls for more

An employee hands an order to a customer through a drive-thru window at a McDonald's restaurant in Oakland, California, April 9, 2020.

David Paul Morris | Bloomberg | Getty Images

An independent interest group of McDonald's Franchisees are weighing in on the company's upcoming meal promotion, encouraging affordability for consumers but pushing for future contributions from the company to make the discount offering sustainable for operators in the long term.

“The fact remains that in order to provide more affordable options to consumers, they must be affordable to owner/operators. McDonald's tremendous resources and financial investments are essential to any sustainable, affordable strategy,” the National Owners Association board wrote in a letter to its membership.

The letter calls McDonald's business model a “penny-profit business, with margins of 10-15%” and says, “There is simply not enough profit to provide a 30% discount to make this model sustainable.” It requires a financial contribution from McDonald's.'

CNBC reported last week that the $5 meal would hit menu boards starting June 25 and last for about a month. It consists of a McChicken or McDouble, four pieces of chicken nuggets, fries and a drink. The combination would be significantly less than purchasing these items separately.

The offer comes as lower-income consumers are withdrawing from certain restaurants due to persistent inflation, and brands look to offer more value to their customers.

CNBC reports this Coca-Cola had added marketing funds to make the deal more attractive to McDonald's and its franchisees after an initial proposal failed to pass internal hurdles. Coca-Cola said in a statement last week: “We routinely work with our customers on marketing programs to meet consumer needs. This helps us grow our businesses together.”

McDonald's declined to comment on the NOA letter to its members. In a statement to CNBC last week about the value meal, the company said: “We know how much it means to our customers when McDonald's delivers meaningful value and communicates it through national advertising. That's been true since our very beginning and never more important than that. Today.”

The company has previously noted that cash flows for U.S. franchisees have increased by nearly 50% on average since 2018. Even taking inflation into account, 2023 was one of the best years for franchisee cash flow in the company's history, McDonald's previously said.

In addition to the $5 promotion, the NOA letter further suggests that the company should continue to innovate on the menu, bringing back things like snack wraps that use existing chicken breasts, creating affordable options with lower food costs so they are more affordable for the owners to sell.

The group also proposed bringing McDonald's spin-off chain CosMc's top two drinks to flagship locations as a way to excite both customers and employees.

These ideas were initially put forward by the advocacy group earlier this year as it pushed to add affordable options to the menu without leaving out “core and iconic” items.

“Recently [McDonald’s CEO Chris Kempczinski] has made public comments about the American consumer's growing need for affordability. This is not a new or unique message; value has always been at the core of our brands,” NOA said in February.

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