McDonald’s Corporation (MCD), the world’s largest hamburger chain, will kick start its breakfast Dollar Menu across the United States early next month to revamp its breakfast sales, which have slowed considerably. Heavy job losses, economic downturn, and the discount war amongst fast-food chains to lure cash-strapped consumers have taken their toll on its breakfast sales.
The breakfast dollar menu will include five items – two sausage sandwiches, a sausage burrito, a 12-ounce coffee and a hash brown. McDonald’s will also start offering Mac Snack Wrap for a suggested price of $1.49.
Burger King Holdings Inc. (BKC), the second largest fast food hamburger chain, and Yum! Brands, Inc. (YUM), that owns, operates, and franchises major fast food concepts such as KFC, Pizza Hut and Taco Bell, also offer similar value items.
The falling commodity prices of key menu ingredients have given a respite to restaurant operators to some extent, as they are able to protect their profits, but relentless competition to woo customers in a weak spending environment has also compelled them to lower prices, which is eating into margins.
In fiscal year 2010, McDonald’s plans to spend more on advertising than it has in the past, to improve its falling fast-food sales. In the United States, comparable sales dropped for the second straight month. Comps dipped to 0.6% in November (versus a 4.5% increase last year for the comparable month) after falling 0.1% in October.
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