McDonald's relies on a new value orientation with McValue platform

McDonald's plans to increase competition in the budget-friendly offerings sector from 2025 with the introduction of its new McValue platform. This initiative marks the first national promotional campaign in the value-for-money segment since 2018. Analyst Danilo Gargiulo from Bernstein describes this development as a continuation of a trend that investors have already observed in the second half of 2024. Affordability and an attractive value-for-money proposition are at the forefront. Over the past twelve months, McDonald's has faced the challenge of consumers increasingly opting for cost-effective meals at home. Additionally, efforts by other fast-food giants to launch similarly attractive offerings, along with the growth of fast-casual chains like Chipotle, Cava, and Sweetgreen, are capturing market share. Franchise operators are confident that the McValue platform will attract customers and thus offset any potential margin losses. David Costa, a McDonald's franchise owner, expressed confidence in the strategy to Yahoo Finance, despite potential margin pressure from the affordable offerings. The McValue platform includes a $5 meal offer and a "buy one, get one for $1" option. Additionally, local deals and exclusive app discounts, such as 20% off purchases over $10, will be available. The McValue platform will be offered in all U.S. McDonald's locations effective immediately. Furthermore, McDonald's plans partnerships with 16 brands at the beginning of 2025 to enable additional offers such as a free month of YouTube TV and a subscription to Tinder Gold Premium Access. These points will be promoted through various advertising campaigns. An anonymous franchise owner, who regularly posts on platform X as McFranchisee, shared that although margins could come under pressure, the increased customer frequency overall ensures a positive cash flow. He also emphasized the challenges of implementing a value platform that works across regions. Wedbush Analyst Nick Setyan does not see major earnings jumps from the new platform but believes that an increasing number of customers could inevitably lead to a higher willingness to order. In this competitive market environment, even a 2% increase in comparable sales would be a welcome signal for investors.