24/7 Insights

• The McDonald’s Corp. (NYSE: MCD) $5 menu has not impressed investors, perhaps because they think consumers won’t be either.

To attract cost-conscious consumers back to its stores, McDonald’s Corp. (NYSE: MCD) created a $5 menu. “Starting” at $5, people can get a four-piece McNuggets, small fries, a soft drink, and a McChicken or McDouble. With a purchase over $1, people can get large fries.

Wall Street was not impressed. The stock is still down 14% this year, while the S&P 500 is 15% higher. The $5 meal did not move the shares higher.

What happened? The $5 deal is nothing special. Burger King, Starbucks, and even Popeyes came out with similar deals.

The question is whether $5 will bring extra traffic back to these fast-food chains. The National Frozen and Refrigerated Foods Association released research showing that 81% of people cook over half their meals at home. The “Eating at Home” study showed that people use home kitchens for two major reasons. One is healthier food choices. The other is inflation. People said they wanted to “control their budgets” and wanted “healthier-for-me” options.

McDonald’s meals are not considered “healthy.”

People may have already elected not to return to fast-food lines, either on foot or in their automobiles. The $5 incentive isn’t enough of a tipping point. And the deals are for a limited time–whatever that means.

The $5 meal has not impressed investors, perhaps because they think consumers won’t be either.

This Fast-Food Chain Has the Most U.S. Locations, and It’s Not McDonald’s

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