Big Macs may be too pricey for Americans

If McDonald reports improving earnings on Friday, one reason will be its Dollar Menu, not its iconic burger.

By Aimee Picchi Apr 15, 2013 1:03PM

A sign outside the fast-food chain McDonaldSure, McDonald's (MCD) is known for its reasonable prices, but the fast-food giant may be finding that even its iconic burger costs too much for many struggling customers. 


When McDonald's reports earnings on Friday, it's expected to produce an increase in first-quarter profit, but the reason for the growth is tied to its Dollar Menu, not the Big Mac, reports The Wall Street Journal.


The implication is that as the economy continues to roil some of McDonald's customers, they're opting for the chain's lower-cost options. The Dollar Menu allows customers to pick offerings such as a Sausage McMuffin accompanied by a small coffee.


The low-price menu's popularity might present something of a chicken-and-egg conundrum for McDonald's. Are consumers opting for the Dollar Menu because they're short on cash, or are they simply picking the lower-cost options because McDonald's offers them?


"Who would pay $4.79 for a sandwich when the two sandwiches on the Dollar Menu are perfectly good?" Richard Adams, a former franchisee and current consultant, told Nation's Restaurant News last year. "It’s just the math. The more you raise prices, the more you encourage people to buy off the Dollar Menu."


A Big Mac costs about $4.20 on average in the U.S., according to the Economist's Big Mac index. In other countries, it's even higher, with Switzerland selling the highest-priced burgers, at $6.81 each. 


Aside from promoting its Dollar Menu, McDonald's is trying to lure diners by improving customer service after mounting complaints about rude employees, as my colleague Jonathan Berr wrote on Thursday


More expensive menu items weren't "resonating with consumers," McDonald's chief executive Don Thompson said, according to The Journal. 


Consumers have been hurt on several fronts this year, from a hike in payroll taxes to a jump in gasoline prices. Those blows have been felt not just at McDonald's but at higher-end chains such as Darden's (DRI) Red Lobster. 


"Value is critical right now," Lynne Collier, restaurant analyst at Sterne Agee, told The Journal. "The consumer is still very weak, facing higher gas prices, the payroll tax increase and employment barely inching up. Value is the No. 1 driver of traffic, and all these restaurant companies are dying for traffic."


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519Comments
Apr 15, 2013 1:47PM
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It seems to me like the Big Mac is shrinking. The beef patties seem much smaller than they were 20-30 yrs ago.  Where's the Beef!

Apr 15, 2013 1:50PM
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love the big mac,,,but way over priced
Apr 15, 2013 2:06PM
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I don't eat at mcdonalds anymore not only because the prices went up, but more so because the food has shrunk in size so much. Those big mac patties are virtually opaque because of how razor thin they make them now.
Apr 15, 2013 2:21PM
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I remember big macs at 99 cents now about 4 bucks so l don't buy them.  I buy the dollar menu sandwiches - if they are gone I won't go to McDonalds any more !!!
Apr 15, 2013 1:57PM
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Remember the commercial from McDonalds?

"What do you get with a burger, fries and a drink?"

Change!

 

How times have changed.

Apr 15, 2013 2:59PM
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I get a craving for a Big Mac every now and again ( along with a Filet o Fish and fries) but it costs almost $8!  I can go to a Chinese buffet for that and stuff myself silly!
Apr 15, 2013 2:30PM
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We used to go to McDonalds because it alway's was just the 2 of us. Last year we had to end that venture. We were paying about $18-$19 just have a sandwich, fries and a drink each. One can buy a bunch of groceries for that price; plus the sandwich tasted as if was under the heat lamps for at least 2 hour sor more. Enough is Enough.
Apr 15, 2013 1:36PM
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Yes, the price has crept up thru the years and I feel it is too high. I must say though, the $1.00  for any size drinks are a big savings and a big reason I will go to McDonalds. I was just at Burger King two days ago and they have raised drink prices again. $2.00 for a medium drink! Outrageous! For a family of four =$8.00 for 4 medium drinks -vs- $4.00 for 4 medium or large drinks at Mcdonalds. Huge savings if your on a budget. 

Apr 15, 2013 2:13PM
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You can't beat the McDouble, or the McChicken for a dollar and if you remove one half of the roll you are only eating 325 or 295 calories. The squirrels in my yard are more than happy to take care of the roll half that I have left over.  I really don't understand the constant criticism of McDonalds and other places, they all publish every calorie and every gram of fat  that's in their product, all you have to be able to do is, read.  If you have a weight problem, guess whose responsible for it ?
Apr 15, 2013 2:37PM
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I love the Big Mac but agree.. I do not buy due to the cost. And yes the burgers are way smaller than they used to be. If you think about it .. It is actually no more than a Mcdouble with a center bun,lettuce,and "special sauce" which is nothing more than thousand island dressing with a splash of worchestershire sauce added. Face it McDonalds .. thats not woth an additional 3 bucks. I agree they have made the stores alot more upscale looking ... I for one am not willing to pay for that. I really feel if they concentrated on giving people more for their money and stop worrying about glam stores they would be alot better off. If I have money to pay for fancy things it will be for things in my own home not their store.
Apr 15, 2013 2:33PM
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I used to go to McD's just for the fries, but now it's hit or miss weather you can even get "fresh" fries there.

Apr 15, 2013 2:31PM
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Rude employees? THey are listening? Wal-Mart, take note..............Starbucks, take note.........
Apr 15, 2013 1:46PM
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I make my "Big Mac" at home and use a burger off the BBQ! The sauce is NOT a mystery to us old folks- You just need the right ingredients like worchestershire sauce! Had to go to my pantry for that spelling!!  As far as Red Lobster, the commercials look great but they use a saucer to make it impressive. I'll go to a real sit-down restaurant and get a real meal and service and usually at a lesser price. 
Apr 15, 2013 1:53PM
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The idea that McDonalds is fast food is a joke. It took me 22 minutes to get hot fudge sundae. They had 18 behind the counter but no service.  The manager fault. She just watched it happen to me and others.  I think I will try out somewhere else
Apr 15, 2013 2:26PM
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I could not tell you how many years it has been since i purchased a Big Mac. I stopped buying them when their size was decreased by 30% and the price stayed the same. I only buy the McDoubles and nothing else as only the 1.00 menu items are in my budget. I don't eat the fries or buy any other items as I want to be around to be an embarassment to my children. . I tried a DQ cheeseburger the other day and my next burger will be a Dairy Queen burger.
Apr 15, 2013 1:55PM
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I agree with the writer's statement about rude Mickie D's workers. I have recently made the switch to Burger K. because of the many bad experiences at McDonald's. The worst part is that the culture seems to start with indifference at the managerial level. Franchisees just seem to pick someone whom they believe won't steal from them.
Apr 15, 2013 2:08PM
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Maybe they should ah....make them better or at least worth the price....

 

Apr 15, 2013 1:29PM
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I am a big eater, and I am totally full on three burgers, or three chicken sandwiches. Why would I buy anything off the regular menu?
Apr 15, 2013 2:14PM
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I haven't eat a Big Mac in well over 10 years...never did really taste like a burger to me anyway. I do occasionally get a McChicken sandwich for a buck which isn't terrible but I've found to be not nearly as good as the $1.00 "chicken crisp" sandwich at my nearby Burger King which is pretty good for a buck.

 

For me, the breakfast choice at McD's is for the $1 sausage burrito, even though it seems MUCH smaller than when it was first introduced. Generally I try to avoid fast food altogether.

Apr 15, 2013 1:59PM
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They do have dollar a dollar value.  My kids had a science fair, a homemade hamburger started to go bad after 3 days, the McDonald hamburger started to go bad after 3 months, what does that say.  Try the healthy meals.  Although the meal will last long, look at twinkies, and they are good.
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