McDonald's Is Down Bad—But Can a $5 Meal Really Save Their Buns?

If anyone tries to tell you inflation was only 3% over the last couple of years, feel free to smack them in the face for me (okay, don’t actually do it—lawyers are expensive). 

Inflation isn’t just something economists in suits talk about on CNBC anymore—it’s affecting all of us, and nowhere is that more obvious than at the golden arches we all grew up with. McDonald's (MCD) is now clinging to a $5 value meal deal like my grandpa clings to the tv remote when Hannity is on.

Back in June, Mickey D’s dropped the news that they’d be offering a $5 value meal. And it wasn’t just any random combo thrown together—it’s the OG lineup. For five bucks, you get a McDouble (or McChicken), small fries, four-piece Chicken McNuggets, and a small soft drink. Let’s be honest: that’s basically the closest thing we have to a time machine at this point.

(Source: McDonald’s)

Initially, this "limited-time" deal was supposed to last until the end of summer and only at a few locations. But then McDonald’s second-quarter earnings came out, and it wasn’t the sunny, happy meal they’d hoped for. Same-store sales dipped 1% globally, and in the U.S., things got even worse with a 0.7% drop. Revenue? Flatlined at $6.49 billion, missing estimates. So, what does a struggling fast-food empire do? Double down on value and extend that $5 meal deal until December.

In a recent statement, McDonald’s CEO Chris Kempczinski straight-up warned us that inflation is hitting the restaurant industry hard, especially with customers now spending their cash with a lot more thought than before. And it’s not just McDonald's. Every fast-food chain under the sun, from Subway’s $6.99 footlongs to Burger King’s "You Way" deal, though let’s be real—does anyone actually go to BK on purpose?

But McDonald’s really leaned into their value strategy, and honestly, it’s working. The $5 meal deal has been a hit, especially with lower-income customers who have been hunting for any break in rising food costs. According to McDonald’s President Joe Erlinger, the deal is “exceeding expectations,” and sentiment around the brand is starting to shift in a more positive direction. Translation: people like cheap, semi-edible food, especially when everything else is getting more expensive by the day.

But here’s the thing: McDonald's might have won this round with their value meal, but they’ve still got a long way to go. While the $5 deal is yielding more foot traffic and making folks feel like they’re getting a good bargain, it’s not a magic fix. The overall financials still aren’t looking too hot, and with competitors lurking (cough, Chick-fil-A), it’s clear that the fast-food game isn’t what it used to be.

Oh and the stock, McDonald’s is down 1.58% year-to-date. Not exactly the picture of health, but hey, at least you can still get a McDouble and some fries for a fiver... for now.

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In the meantime, stay sharp and stay hungry. Catch you next time...

Stock.News has positions in McDonald’s.