Why McDonald's might regret killing its Dollar Menu

Get ready for the new "Dollar Menu & More"

McDonald's Dollar Menu items
(Image credit: (Facebook/McDonald's))

Take one last look at the McDonald's Dollar Menu. By Nov. 4, it will officially be called the Dollar Menu & More, offering items ranging between $1 and $5.

The idea is to add "some elements of the Dollar Menu, [while] adding two more tiers" of prices, a McDonald's spokesperson told AdAge. It's unlikely, however, that customers will celebrate the ability to spend more on fast food — especially because low prices are the main reason people go to McDonald's in the first place.

Earlier this year, a poll found that fast food customers, despite giving McDonald's dismal scores for "overall satisfaction," were repeatedly drawn to the Golden Arches for the "good value" and "convenience," while ignoring factors like "taste."

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Appropriately enough, the chain's forays into higher-end menu items — like its short-lived Angus burgers, which sold for between $4 and $5 — have been disappointments. Sales of its new Mighty Wings have been flat, also not a surprise since they cost about $1 per wing.

Meanwhile, the Dollar Menu alone accounts for between 13 and 15 percent of McDonald's sales. In fact, last year the company's strategy was to add more items to the Dollar Menu after pricier items flailed. Here is former franchisee Richard Adams, now a consultant for other McDonald's owners, on the decision at the time:

Who would pay $4.79 for a sandwich when the two sandwiches on the Dollar Menu are perfectly good? It’s just the math. The more you raise prices, the more you encourage people to buy off the Dollar Menu. [Restaurant News]

The pricier, fast-casual market is already dominated by Chipotle and Panera Bread, meaning it's unlikely McDonald's can lure customers willing to spend a little more for lunch. Its appeal, now and for the foreseeable future, is that it costs pocket change to eat there, sometimes literally.

The new Dollar Menu & More is the company's effort to "have its cake and eat it too," writes Susana Kim of ABC News, trying to capitalize on the hugely popular Dollar Menu brand while still raising prices. Will people notice? Yeah, probably, seeing as the Dollar Menu has been around for more than a decade now.

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In the end, McDonald's couldn't afford to keep the Dollar Menu forever. Droughts have caused beef prices to rise and, as Bloomberg's Venessa Wong notes, inflation alone means a $1 burger from 2002 costs $1.30 today. But judging by the sales numbers of the Dollar Menu, it might want to perform whatever culinary and financial magic it can to hold on for as long as possible.

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Keith Wagstaff is a staff writer at TheWeek.com covering politics and current events. He has previously written for such publications as TIME, Details, VICE, and the Village Voice.