'Dollar Menu' helped McDonalds through tough times

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McDonalds
Washington, Jul 15: McDonald's 'Dollar Menu' has been instrumental in maintaining leading fast food chain's profitability even in tough times, according to a Tel Aviv University researcher.

Dr. Itai Ater insists that McDonald's 'Dollar Menu' is an ideal model for corporate success in the times of economic crisis.

"People think about McDonald's as a place to eat cheaply, a place where you get value for your money," he said.

Ater, who recently did a case study of the McDonald's Dollar Menu, says that clever pricing, and the ability to spread that pricing across all the chain restaurant's franchise outlets, is a key component in McDonald's winning formula.

The ability to keep prices low is what attracts consumers in any economic climate, and this is one of the building blocks of McDonald's corporate strategy.

In 2002, when McDonald's first unveiled the Dollar Menu in the US, the chain was faltering.

"Before the Dollar Menu, McDonald's franchise owners were beginning to charge higher prices for the menu items," says Dr. Ater.

"McDonald's stock was down. Now it's doing very well. It is one of the factors that has made them more successful over the past six or seven years," said Ater.

He said that McDonald's heavy advertising of the new initiative was central to price uniformity throughout the chain.

Because of this emphasis on advertising, consumers expect the Dollar Menu to be available in all the restaurant's franchises.

"Individual franchisees faced consumer disappointment if they didn't offer the deals advertised. They adopted the Menu rather than risk losing customers," Ater added.

By making McDonald's an affordable family outlet, the corporation encourages customers to become repeat consumers from a young age.

Dr. Ater said McDonald's remained able to offer such low-priced meals due to the organization of the company. They purchase in bulk and the preparation and content of each menu item is highly regulated.

ANI

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