Coming price cuts at McDonald's may signal a broader fast food price war

Key Points

• McDonald's is cutting prices on combo meals to attract customers deterred by rising costs, offering meals up to 15% less than ordering separately, starting Sept. 8.
• In response to declining visits from lower-income consumers, CEO Chris Kempczinski acknowledged that high combo meal prices have shaped negative value perceptions.
• The average price of McDonald's menu items surged 40% between 2019 and 2024 due to increased costs in labor, packaging, and food, prompting the need for strategic price cuts.
• McDonald's price reduction may trigger a price war in the fast-food industry, as rivals like Domino’s have already launched promotions to counter these pricing trends.

McDonald’s is cutting prices on some combo meals to woo back customers who’ve been turned off by the rising costs of grabbing a fast food meal.

The price drop may induce its rivals, who have run into some of the same pricing issues, to follow.

Starting Sept. 8, McDonald’s will offer Extra Value Meals, which combine select entrées like a Big Mac, an Egg McMuffin or a McCrispy sandwich with medium fries or hash browns and a drink. Prices will vary by location, but McDonald’s said Extra Value Meals will cost 15% less than ordering each of those items separately.

To kick off the promotion, McDonald’s will offer an $8 Big Mac meal or a $5 Sausage McMuffin meal for a limited time in most of the country. Customers in California, Alaska, Hawaii and Guam will have to pay $1 more for those meals.

McDonald’s for years has seen a steady decline in visits from customers in the U.S. who have household incomes of less than $45,000 per year. CEO Chris Kempczinski said those consumers, and others, no longer see McDonald’s as a good value.

At a McDonald’s near the company’s Chicago headquarters, for example, a 10-piece Chicken McNugget meal costs $10.39.

Higher prices have been been a drag on sales. McDonald’s same-store sales – or sales at stores open at least a year – grew 2.5% in the April-June period, but that was mostly because of higher prices. Fast food visits by lower-income consumers dropped by double-digit percentages industrywide in the second quarter, McDonald’s said.

“Today, too often, if you’re that consumer, you’re driving up to the restaurant and you’re seeing combo meals priced over $10,” Kempczinski said during a conference call with investors in August. “That absolutely is shaping value perceptions in a negative way. So we’ve got to get that fixed.”

McDonald's job has been made harder by prices that can vary widely around the country. In May 2024, after a post on X about a Big Mac meal in Connecticut that cost $18 went viral, McDonald’s called it an “exception” and noted that franchisees set prices for nearly all U.S. restaurants.

The company also blames higher costs. The average price of its menu items rose 40% between 2019 and 2024, McDonald’s said, to account for a 40% increase in the cost of labor, packaging and food.

But within a month, McDonald’s introduced a $5 Meal Deal, which combined a McDouble burger or a McChicken sandwich with small fries and a small drink. That deal proved so popular it was extended through this summer.

In January, McDonald’s added another promotion, letting customers buy a limited number of items for $1 if they bought one full-priced item. Those deals will remain alongside the Extra Value Menu for now, McDonald's said.

Other chains are also seeking to grab the attention of potential customers. In late August, Domino’s launched its Best Deal Ever promotion, offering any pizza with any toppings for $9.99.

Overall U.S. fast food customer traffic fell nearly 1% in the second quarter, according to Revenue Management Solutions, a consulting company. The company said price increases were sharply lower than previous quarters, suggesting that chains are already offering more deals.