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This seems like a bad example, there is a good video by modern MBA on taco bells value menu that mentions McDonald's losing money with the dollar menu
Figures, the price hike was probably long overdue. Sucks that it hits so hard now but it is what it is
I find it hard to believe McDonald's was losing money on the dollar menu items. Considering they owned the entire process from factory, shipping, to restaurant. Back in the 90's even I know the fountain drinks alone were insanely profitable.
They might not “lose money” per McChicken sold but if they’re not gaining a certain dollar amount per hour/week/month/etc that particular McDonalds restaurant might lose money over time.
Take two burger places, one of them makes 20 cents on every burger, while the other makes a dollar and 20 cents on every burger. Even if the latter one gets a bit less traffic it’s absolutely going to out perform the former.
This can suck but… if can also be the reality of the situation. A sandwich (even a small one) being a single dollar is likely way below McDonalds usual margin, and unless you’re demanding an immediate People’s Revolution of fast food restaurants they’re going to run the numbers and make the most profitable locations they can.
I mean, I worked there. I was there when the beany baby craze was in full effect. The profit margins even back then were huge since they control the entire supply line. Never thought I'd see the day people come out to be apologists for McDonalds.
Their revenue from 2002 when they introduced the dollar menu meal was $15.40 B. Then climbed to 20 billion by 2005 and has bounced between 20 to 28 billion every year since except for 2020 where they dipped to 19 billion. They are far ahead of https://companiesmarketcap.com/mcdonald/revenue/ https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/gross-profit
Why I'm getting downvoted because a video (that wasn't linked) had someone talking about a Yum! branded company (Taco Bell) whos profits tanked in 2016 (from $13B to $1.89B) mentioned McDonalds... who's not seen any sort of comparable problems as based on the links I provided... is beyond me.
It’s not really “shilling for a company” to understand that price increases for products (especially “value” products) do not often perfectly follow country-wide overall inflation percentages
Sorry, I think this is the video https://youtu.be/WKh85_81US0
Interestingly, taco bells lower performance gave them more freedom
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If I recall correctly, taco bell started the value menu war but they made items that were designed to be priced at one dollar. Burger King, Wendys, and McDonald's discounted existing items that cut into their previous prices in response.
They may have been, but then they'd just be a "loss leader" and then you have your employees upsell. It's still be a good idea even if they did lose money on those items.