McDonald’s Revamps Value Strategy with McValue Platform
After a tumultuous year marked by sluggish sales and an E. coli outbreak, McDonald’s is poised to turn the corner in 2025 with the launch of its new national value platform, McValue. This comprehensive program aims to revitalize the brand’s value proposition and reclaim its position in the market.
A Fresh Start
McValue is built around a $5 meal deal, which was initially introduced last June and showed promising results before being disrupted by the E. coli outbreak in October. The platform also features a buy one, add one for $1 option, as well as local deals and in-app exclusives. Starting January 7, all US locations will begin offering McValue, marking a significant milestone in the company’s efforts to revamp its value strategy.
United Front
The launch of McValue is the culmination of months of planning and collaboration between McDonald’s and its franchisees. John Palmaccio, owner and operator of 30 McDonald’s locations in South Carolina and Georgia, emphasized the importance of getting it right, stating, “We took the time to review consumer and deal performance data to ensure the McValue business case was solid.”
A National Platform
McDonald’s CEO Chris Kempczinski highlighted the need for a unified national platform in the company’s first quarter earnings report in April 2024. At the time, US same-store sales grew 2.5%, falling short of Wall Street expectations. Kempczinski noted that the lack of a national value menu had eroded McDonald’s position in the market, as competitors had already established their own value offerings.
Driving Transactions
Wedbush analyst Nick Setyan believes the McValue platform will drive transactions, rather than profits, by encouraging customers to trade up to other menu items, add more to their meals, or visit more frequently. Even modest same-store sales growth of 2% would be a welcome development in this competitive value environment.
A Long History of Value
McDonald’s has a rich history of value offerings, with the McValue platform marking the fourth official national value initiative in recent history. The iconic Dollar Menu, launched in October 2002, was initially met with skepticism but eventually became a cornerstone of the brand’s value strategy.
Lessons Learned
The company has learned from past mistakes, such as the complexities of the 2018 $1 $2 $3 Dollar Menu. Bernstein analyst Danilo Gargiulo praised the McValue platform for its simplicity and flexibility, allowing franchisees to customize offerings and set regional pricing differences.
A Sustainable Approach
Gargiulo believes the McValue menu is more sustainable than its predecessors, as it allows franchisees to adapt to changing market conditions. Over time, the core meal deal can be modified or customized to meet evolving consumer needs.
A New Era for McDonald’s
As McDonald’s looks to reclaim its leadership position in the value market, the McValue platform represents a critical step forward. With revenue expected to reach $26 billion and net income projected at $8.3 billion in fiscal 2024, the company is poised for a fresh start in 2025.
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