The Real Reason Dollar Menus Are Disappearing Across The Country

The Real Reason Dollar Menus Are Disappearing Across The Country


The Dollar Menu at your favorite fast food
place may seem like a great idea, but across America, those super cheap menus are disappearing. Just why is that? It turns out it’s actually a complicated combination
of a lot of reasons, and some are very surprising. In 2013, McDonald’s announced that it was
going to completely get rid of its Dollar Menu. At the heart of the problem was money. The land of the golden arches first released
its Dollar Menu in 2003. In the ensuing years, continued competition
between fast food chains kept prices low as everyone scrambled for their piece of the
pie, but a decade after launch, those Dollar Menu prices became problematic. Over the years, the cost of ingredients has
been steadily on the rise, but the Dollar Menu stayed the same low, low price and that’s
a huge problem. Just look at the cost of buying beef. According to the Official Data Foundation,
the price of uncooked beef was 69 percent higher in 2013 than it was in 2002. Unsurprisingly, the profit margin on cheaply
priced menu items just isn’t wide enough to weather that sort of increase. In 2009, the ketchup hit the fan when Burger
King franchisees banded together to protest corporate’s long-term 99-cent double cheeseburger
promotion. The reason for the outrage was pretty simple:
each one of those double cheeseburgers cost about $1.10 to make. Franchisees originally rejected corporate’s
push to sell the super-cheap burgers, and the conflict eventually led to a lawsuit on
behalf of the franchisees. Burger King said it had a right to force franchisees
to participate in promotions, while franchisees said it wasn’t right to force them to sell
a product at a loss. Some stores had already closed in the past
because low-priced items dug too far into their profits. Franchisees were fighting to keep that from
happening again. In 2011, the two sides settled. In exchange for dropping the lawsuit, franchisees
were given more control over pricing, promotions, and ultimately, the Value Menu. No one can possibly expect any restaurant
to sell their product at a loss, especially when they’re paying royalties to their parent
company on every burger sold. Fast food restaurants are caught in an existential
dilemma. On one hand, they need to be affordable enough
to appeal to a customer base that’s looking for a super-cheap meal. But on the other hand, that same super-cheap
meal isn’t going over well with an entire demographic. According to the BBC, people under the age
of 40 aren’t just shying away from dollar menu prices, but most fast food in general. They’re willing to spend more money on their
lunches, so long as they’re getting sustainable, high-end ingredients. “The reality is millennials cleary don’t value
McDonald’s products the way that the early generations do, and they don’t have the
same relationship with the brand that previous generations have had.” Overwhelmingly, millennials have said that
for them to eat at fast food joints, the food needs to be high quality and nutritious, and
not contain any artificial ingredients. That’s pretty hard to achieve on a $1 item
without losing a lot of money. Better ingredients tend to cost more money,
after all. People don’t just want fresher ingredients,
they also want healthier ingredients, and fast food chains have been responding. In 2016, McDonald’s was looking at not just
the cost of doing business with these new demands, but the cost that was going to get
passed on to customers. Items like salads, wraps, and whole grains,
which are all more expensive than traditional fast food options, debuted on the menu with
prices much higher than $1. And that, in turn, leads to a balancing act. Adding more healthy menu items means reevaluating
an entire menu, because you can’t just keep adding things to a menu without dropping others. One of the key components of any restaurant
is a menu that’s a manageable size so as to avoid waste and customer confusion. So with healthy, high-end stuff arriving,
the cheap stuff that’s just not making money gets cut. It wasn’t until 2017 that McDonald’s officially
announced that it was coming out with a replacement for the Dollar Menu. By early 2018, budget-minded customers were
going to once again have some bargain choices, with menu items priced at one, two, and three
dollars. This seems like a win-win, as chains could
still offer a few menu items at low price points, without going so low that they end
up losing out. But by the end of 2018, it became clear that
the tiered menu hadn’t been nearly as successful as McDonald’s had hoped. Analysts say that not only is the chain too
focused on its Dollar Menu offerings, but that the tiered system encourages the most
budget-minded customers to opt for the lowest costing foods instead of the higher-priced
options. “I’m a failure! I’m a failure! I’m a failure!” There are two types of customers: the ones
you have, and the ones you’re trying to get. So it’s important for restaurant chains to
ask if value menus lure customers away from other chains. In 2018, the market research firm NPD Group
ran a study to determine whether or not new customers were attracted to a certain place
by their dollar menu offerings. The short answer is: No. The study did find that while an overwhelming
majority of customers who bought something off the value menu purchased it as an add-on
to a regular menu item, there was no increase in the numbers of new customers linked to
value menu promotions. While it might seem logical that people would
be more inclined to try a new place with minimal financial risk, the numbers just don’t reflect
that. Check out one of our newest videos right here! Plus, even more Mashed videos about your favorite
stuff are coming soon. Subscribe to our YouTube channel and hit the
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100 Comments

  1. Haven't been the biggest fan of McDonald's in years. That being said, not all Millenials or gen Z's are trendy, Chipotle obsessed, hipsters. Sometimes people just wanna go to a McDonald's, Checkers/Rally's, Wendy's, Hardee's/Carl's Jr, etc. I can't speak for everyone else, but with me, I liked McDonald's as a kid but have had better as I got older. The fact of the matter is there are now so much more options, that it naturally cuts into McDonald's profits. Yes, some are restaurant chains that focus on a more "modern" experience and "fresh" ingredients. But then you have chains like Chick-fil-A which ballooned from South Eastern Coast (I've been eating before it became cool😅) and is taking the rest of the U.S. by storm. Then you have random venues like Starbucks. Starbucks has actually been around since 1971, but then the second half Gen Y's (kids born from 1990-2000) turned it into a juggernaut by their early teens. Then they got their younger siblings (most late/younger Gen Y's, are older siblings to the older Gen Z's) addicted as well. I am by no means a coffee person, in fact I distinctly despise the taste of coffee no matter the sugary dressing, but even I have to admit that the inconceivably convoluted customizations and "secret menu items" are at least interesting to look at.

    Side note: Idk why marketing teams find us sooo mysterious, they made us. We are the byproducts of the internet that they created, the television that they convinced our parents to stick us infront of, and the ideologies that we either accept or reject are a reflection of the choices and laws that they've enacted. It's the same for the generation before them, amd the ones before them. What's so hard to understand?

  2. Back in the day my lunch consisted of two burgers 20 cents each and two fries 30cents each. No drink because I always had a 10 Cent can of soda. That same burger today is smaller and the price has increased more than 400%.Today those same fries have have increased by more than the burgers and they taste like cardboard. I no longer buy fast food unless I have a coupon.

  3. Honestly I'd rather stay home and cook then go out and eat home cooked food will last me about 3-5 day's longer if I freeze it

  4. The McDonald's in my neighborhood has the nerve to charge $2.29 for a crummy lousy cheap little paper thin cheeseburger

  5. It's according to what I feel like at the time that determines where I want to eat weather it be Taco Bell or Wendy's or Burger King or Sonic or Pizza Hut or Whataburger. But I don't eat at a McDonald's or Domino's

  6. I'm surprised they didn't talk about one of the reasons being from the minimum wage going up. I live in Oregon and it goes up $0.50 or more every year. I noticed prices increase on things every six months or more if they keep creeping up because I know the owner doesn't want to lose out on the deal. Whatever I talked about this Democrats get really mad and don't blame the minimum wage because they wanted to go up which I enjoy making more money I'm not going to lie but if you have to pay employee $10 an hour vs15 we're going to raise your prices common sense

  7. This really isn’t super accurate. The financial reasons were correct. However as they tried, they could just raise the dollar menu to the two dollar menu etc. So this really isn’t the reason they are gone.

    The real main reason these are gone is because it was just cannibalizing their existing customers and making less profit in the process. As all the chains (Bk, Wendy’s etc) kept dropping their prices they didn’t gain new customers. All of these chains must have realized “hey if we all just get rid of these menus, we’ll all still have the same customers but all of us will make more $”. So instead of competing on price, they decided to compete on other things (types of food, service etc).

  8. The first reason is probably the biggest.

    Inflation makes it borderline impossible to keep anything at the same price forever.

  9. 1:00 BK owners must be idiots.

    You sell it at a slight loss because it attracts people.

    People don't buy naked burgers – they get fries and drinks and THAT'S where your profits are.

    Especially drinks.

  10. Liars!! Its not even 100 beef so they dont buy as much as they want us to believe…with all the fillers they put in the food and hormones and preservatives that are killing us slowly…well ive stopped eating the crap! McDonald's sucks

  11. There's something wrong with this generation, the blame always points out to the millenials when some aren't even included in the generation of the millenials. I guess the adults of todays generation always puts the blame on others. Wake up, the problem and the solution is actually really clear but the problem is that every single video points out at a certain generation instead of improving what they lack. That's the reason why fastfood places struggle, they kept blaming people instead of doing what they could "sigh"

  12. It sucks! I used to get a sausage biscuit from Mickey ds for 1 dollar and they were the main reason I would go especially in college.

  13. i get bacon or sausage on sale for $2 then cheese slices for $2 then muffins for $1 viola! breakfast all week at home cheap!

  14. 2 things to consider. Those that live near or at the poverty line, which is many more than I originally thought. This is pretty much almost all my county.
    We build a meal from the value menu or get the 2 for $5. Sustainability doesn’t matter to these people. We are just trying to put food on the table.

    You get a middle class person and a person near or at the poverty line. They will have super different views on what is expensive and what isn’t. They will have completely different view points on money.

  15. … because people thought you can just raise minimum wage to $15 an hour, get paid the same as a paramedic, and large companies wouldnt mind.

    Raising wages not only has cost prices to rise, but it costs jobs. Most smaller companies can no longer afford to have the staffing do to rising wages and rising obamacare costs.

    Sure McDonalds, Disney, and other companies will be fine but do you really think you will things will improve? They will now cut your pensions and healthcare so they can pay you couple extra bucks that you wanted.

    Disneyland now costs $10 for a churro. A churro!!! Yes, the one that is smaller then the one dollar churro that costco makes a profit off you. The kicker … people still pay it. 🤦‍♂️

    So why are dollar menu prices rising? The sales haven't dropped. You still buy the same products or invest in an even more expensive combo now. They aren't stupid. They are a business and looking out for one thing … themselves.

  16. I stopped eating fast food especially mcdonalds because of poor customer service and poor quality food with higher prices only fast food i will eat is at chic fil a they respect my money and dont give me an attitude when i ask for sauce

  17. This is something that's very SIMPLE and EASY to UNDERSTAND, but even CONSUMERS do not LIKE it . Even LARGE SCALE RETAILERS and FOOD SERVICE is nothing RETAIL SALES .Those that BUY in VOLUME even it its there OWN PRODUCER they COST to PRODUCE the FINISHED PRODUCT YOU CONSUME going UP the PRICE hoes UP .As FOR PROFIT ENITES which PRIVATE BUSINESS is it has to happen . If YOUR WAGES kept PACE with PRICES it know PROBLEM , but they NEVER do . EVERY TIME PRICES GO UP for any REASON the COST INCREASE must be PASSED on to make UP for LOSS PROFIT to KEEP a BUSINESS VIABLE as a BUSINESS. it's COMMON SENSE , EXCEPT for STUPID ASS POLITIC which START TRADE WARS with there BIGGEST DAMN TRADING PARTNER ,COST PRICES to GO SKY HIGN .HURTING the OUT of BUSINESS as CONSUMERS alike they WONDERING the PUBLIC calling them everything but a CHILD OF GOD , if they ever PULL THERE HEADS OUT THERE ASSES and THINK THINGS THOUGH before they ACT STUPID the , PUBLIC would at LEAST ACCEPT THEM and there ACTIONS RIGHT now I DO NOT think they TALK to the PUBLIC that KNOWS.

  18. Why are Americans so fucked up with money like fuck me! McDonald's is shit expensive in my country! It's 5$for a big Mac!

  19. It's actually kind of simple every year everything goes up in price so you expect something fifty to a hundred years from now s*** even 20 years from now to be a dollar…smh $20 in 1955 was $100 now…

  20. All fast food is pretty much the same. When I am in a hurry or on a road trip, I'll get the cheapest fast food I can find. I am simply not willing to spend much for fast food and I can't remember the last time I bought fast food without having a 2 for 1 coupon. And we must not forget that most people work for their money and that every dollar a working person earns is precious. I expect and demand a lot for every dollar I spend because in order to get that dollar, I had to go to a place I would rather not be, around people I would rather not know, doing things I would rather not do.

  21. Fast food prices have skyrocketed here in Washington ever since the voters voted for the highest minimum wage of all 50 states. Not just the dollar menus that have dwindled. Across the board, any meal at a fast food restaurant is crazy high now. Right or wrong, the side effect to drastically raising the minimum wage is higher prices for all.

  22. Death of the dollar menu sandwiches were already predicted in 2008 when they passed Obamacare mandatory penalty fees.

  23. They are disappearing because people think fast food is a career and should pay outrageous wages. Wages go up,costs go up,its simple economics.

  24. So they not get a 99cent cheeseburger that cost 10 cents more for you to make will be recovered when they by fries and watered down soda?

  25. $1 in 2003 is equivalent to $1.39 in 2019. That's why the dollar menu is going away. McDoubles and McChickens are literally like $1.39.. lol

  26. The dollar menu is an ebb and flow promotion. It’s done as a means to bring customers in and get comfortable ordering from the menu. After a while, the chain scales back the dollar menu with the intent of the customer ordering something else. After a bit of time and sales dip, the dollar menu returns. This is the same for app sales as well.

  27. Up here in Canada we just had the 'value' menu. Basically the same thing as the dollar menu only it costs a lot more.

  28. Burger King needs to come out with something new because their menu is boring AF. There is nothing there that I would want to try

  29. The real reason: 💰… I’ll elaborate… cash, money, dollars, yens, euros, dinars, rubees. Should i keep going on?

  30. Life doesnt revovle around millenials and thier money .we are poor and in our 50's and our kids are poor so the lackof dollar menus hits us the hardest. Funny thi g is the rise in beef prices makes more ranchers billionaires but we still hear them complaining.

  31. Us in gen z are in the prosses of bringing the 💵 menu back. Its one of the thing we got to fix from the millennial generation. I dont mind some fries and a $1 mc chickens

  32. Ronnie's Southwest Salad with grilled chicken is excellent and healthy. Good quality ingredients! The dressing is stellar!!!

  33. Quick answer: Inflation
    Not so quick answer: The fractional reserve banking system causes inflation which makes fiat currency devalue and the price of goods valued in fiat go up.

    #stacksats

  34. I miss the way McD's used to be. Picked up a McChicken sandwich and Big Mac for me & hubby & got home & they were nearly cold…and I live half a mile away. They weren't good eats. So that's why I no longer think of McD's. Every time I eat there, I'm disappointed.

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