Have you tried the new not-really-a-Dollar Menu at McDonald’s?
According to the numbers, you probably haven’t. And that’s hurting McDonald’s, the world’s second-largest restaurant chain, to the tune of billions of dollars.
Shares of McDonald’s fell 4.8 percent Friday. The company is still worth $118 billion, so that means it lost enough value that theoretically you could have bought its much smaller competitor Wendy’s with the amount of the loss, and had a lot left over.
That drop makes this reportedly the biggest one-day dollar decline the restaurant has ever suffered, at least going back to 1972 when data was first tracked.
Meantime, it’s been a rough two months so far. Traders who bet against McDonald’s stock by short selling it have made almost $200 million this year, according to another report.
I feel like I should point out that yes, while people are calling this McDonald’s worst day, it’s purely from a financial perspective. Nobody was physically hurt or anything, although from a corporate point of view it’s the finances that really matter.
The reason behind the drop is twofold, according to analysts:
First, slow sales of the new “$1 $2 $3 Dollar Menu.” They expected it to boost the top line, and it’s just not working.
Second, an influential analyst’s report that spelled out not just how “disappointing” these sales have been, but also how the bit marketing investment in this revamped menu item may have had a ripple effect that hurt sales of other menu items, too.
The report came from David Palmer, an industry analyst at RBC Capital Markets, as excerpted on Marketwatch:
“Our sense is that the $1, $2, $3 platform stole attention from local marketing, particularly at breakfast, which likely slowed as a consequence. … In addition, we believe the menu’s position as a variety play… lacked the ‘hero’ item necessary to resonate with value-conscious consumers.”
“Lastly, we believe McDonald’s early signaling of this initiative may have invited a flurry of competitor responses and diminished its overall impact.”
That middle line, about the lack of a “hero” item, further explained: There are no french fries on the “$1 $2 $3 Dollar Menu.”
That may be the real scandal. And it makes me a little sad.
Maybe the right word is more “wistful” or “nostalgic.” Maybe you’ll relate in some way.
Years ago, when I was in college, my friends and I kept odd hours. Sometimes we were studying or writing. Other times, we were up to … less productive pursuits.
In the middle of the night in the middle of the week, we’d get hungry. And there was only one place within traveling distance of our college to get anything to eat: the McDonald’s inside a rest area on the southbound lanes of Interstate 95 in Connecticut.
What would starting, broke college students buy in the early morning hours on a random Wednesday? Burgers and fries from the Dollar Menu.
Yes, way back when, when I had almost no money and was starving, Mickey D’s was there for me and my friends. For old time’s sake, I think I’ll stop by and try them out again.
Maybe even splurge a $3 Egg McMuffin. Watch for a new analyst’s report, right?