Third-quarter same-store sales in the U.S. rose 0.7%. Global
same-store sales were up 0.9%. Fourth-quarter same-store sales will
be similar to recent quarterly trends and restaurant margin will
contract, the company said. Revenue rose 2.4% to $7.32 billion,
just missing analyst expectations. (The average of 23 analysts'
estimates compiled by Bloomberg was $7.33 billion.)
The new menu will keep "some elements of the dollar menu,
[while] adding two more tiers for our customers," said the
spokeswoman. The Dollar Menu & More lineup includes sandwiches
that range from $1 to $2. The third and priciest tier will see
items like a 20-piece McNugget around the $5 mark.
The menu makes room for what the company calls "pricing
flexibility" for items like the McDouble, a product that caused
friction between franchisees and corporate. In 2008, McDonald's and
franchisees were at odds over the double cheeseburger. Franchisees
wanted it off the dollar menu in light of rising commodity costs
and what they said was a decrease in profitability. In the end, the
compromise was the McDouble, a burger with one slice of cheese
(instead of two) and two patties.
The Dollar Menu & More will replace the Extra Value Menu, an
attempt at a mid-tier value menu with items up to $2, which was
introduced in 2012 and did not meet sales expectations. For the
last year, McDonald's has been focusing much of its marketing
dollars on value and the Dollar Menu, while working to balance that
with promotions of pricier new items like the McWrap, its biggest
product rollout of the year. The company late last year tweaked its
2013 marketing calendar to have an emphasis on value promotion in
an effort to stave off declining sales.
The Dollar Menu & More was being tested in Columbia, S.C.;
Albuquerque, New Mexico; Hartford, Conn.; Memphis, Tenn. and
McDonald's isn't the only chain to overhaul its dollar menu.
Rival Wendy's in January tweaked its value menu, formerly known as
the 99 Cent Menu, calling the new one the Right Price Right Size
menu. The items on the menu range from 99 cents to $1.99 and, like
McDonald's, it allowed Wendy's to increase prices of some items.
For instance, The Junior Cheeseburger Deluxe was increased to
$1.19, instead of 99 cents.
McDonald's has tried to draw American diners with pumpkin-spice
lattes, chicken wings and other fare as U.S. fast-food rivals fight
to come up with the hottest new items amid falling consumer
confidence. In the third quarter, the company rolled out pricier
limited-time Mighty Wings in conjunction with the start of the NFL
season. On the call Mr. Thompson noted that Mighty Wings sales were
on the lower end of the company's expectations. "One dollar per
wing was still not considered to be the most competitive in the
current environment. The other thing we saw, and it's a very slight
modification, the flavor profile is slightly spicy for some
consumers." Despite slight disappointment, he said, "You will see
wings again in the U.S." even after this limited-time promotion
--Additional reporting from Bloomberg News