McDonald’s has announced a new value meal for 2025 for as low as $5 along with a buy-one-get-one (BOGO) offer for only $1. The move is designed to lure value-conscious buyers to its stores as many consumers have been giving fast food a miss and instead been opting to eat at home as inflation persists.

Beginning January 7, McDonald’s will launch the new value platform, McValue across its restaurants in the US. “McValue will include current fan-favorites like the $5 Meal Deal, exclusive in-app offers, and local food and drink deals – plus, a brand-new Buy One, Add One for $1 offer on popular items for breakfast, lunch and dinner,” said the company in its release.

What’s In the New McDonald’s $5 Meal?

Along with extending the $5 meal, the platform will allow customers to customize their deals and will let them choose from a wide selection of items by paying only $1. To claim the deal, customers will first need to order one full-priced menu item from the McDonald’s McValue menu post which they can add one of the other items available for only $1. The menu for the $1 item is different for breakfast and lunch/dinner.

“When it comes to value, we know there’s no one-size-fits-all. We’ve worked closely with our franchisees to create a new platform that will let our customers define value on their own terms,” said Joe Erlinger, President of McDonald’s USA.

Cory Watson, McDonald’s Owner/Operator and National Value Chair for 2025 said, “No matter the city or the state, they’re telling us how important it is for them to find their favorite meals at affordable prices.”

She added, “And we couldn’t agree more. That’s why we’re committed to continuing to serve up great local deals – from special discount pricing on fan-favorite a-la-carte items to unique meal bundles.”

McDonald’s Has Stressed That Offering Value And Affordability Is Its Priority

McDonald’s launching a lower-priced value meal hasn’t really come out of the blue. In its Q3 2024 earnings release on October 30, McDonald’s said, “We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending.”

During the earnings call, CEO Chris Kempczinski said that while customers have historically seen it as a value leader in the industry, the company’s “value leadership gap has shrunk.” He listed the various measures that McDonald’s has taken to improve value in different regions and stressed, “Value and affordability will remain at the forefront of our conversations with markets around the world.”

Restaurants Have Been Launching Value Meals to Lure Customers

The US economy has been growing at a brisk pace and expanded at a pace of 2.8% in Q3, as per the advanced estimate. Moreover, inflation as measured by CPI (Consumer Price Index) rose at an annualized pace of 2.6% in October. The headline numbers portray a rosy picture of the world’s largest economy as not only is the growth well above the trendline but inflation is also getting near the 2% that the Fed targets.

However, these headline numbers conceal the pain that many consumers in low- and middle-income families have been facing where many are struggling to make ends meet. McDonald’s launching the new value meal is yet another testimony to the deep economic troubles that many are facing.

Quick Service Restaurants (QSR) have been feeling the heat and other players have also launched similar value meals. For instance, earlier this year Wendy’s launched a “$3 breakfast deal” for a limited period. It currently offers another breakfast deal for $3 wherein customers can choose two items from Egg & Cheese English Muffin, Sausage & Cheese English Muffin, Small Seasoned Potatoes Sausage Biscuit, Egg & Cheese Biscuit, and Med Hot Coffee.

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Burger King, which is owned by Restaurant Brands International, also launched a “Your Way Meal” for $5 for a limited time but eventually extended the offer until October.

Value Meals Helped McDonald’s Post Better-Than-Expected Revenues in Q3

Value meals helped McDonald’s post a 3% rise in its Q3 revenue. Its same-store sales in the US – a key metric in the restaurant industry – also rose 0.3% during the quarter after having fallen in the previous quarter.

Separately, McDonald’s is also battling the fallout from the E. coli breakout which led to almost three dozen hospitalizations and one unfortunate death. During the Q3 earnings call, Kempczinski said, “While the situation appears to be contained, and though it didn’t affect Q3 numbers, it’s certainly an important development, which I know is on many of your minds.”

Food-Away-From-Home Prices Have Risen At a Mixed Pace

Food inflation has been a burning issue in the US and across the globe, especially as wages haven’t kept pace with the price rise. The data on food inflation is quite interesting though. According to the US Department of Agriculture, in 2022, food-at-home prices increased by 11.4%, while the rise in food-away-from-home prices was 7.7%. Things however changed in 2023 as restaurants passed on higher food prices to customers. While the rise in food-at-home was 5%, food-away-from-home prices increased by 7.1% last year.

According to the data from the Bureau of Labor Statistics, the rise in prices for food-away-from-home has trailed that of at-home food prices so far in 2024. Since many customers find food prices at restaurants too high – even as the inflation there is arguably running below the average food inflation this year – food chains have had to offer value meals to cajole customers to dine out.

However, these value meals can take a toll on restaurants’ profitability as they are invariably lower margins compared to full-price menus. Even McDonald’s reported a fall in its Q3 profits despite a 3% YoY rise in revenues.

Meanwhile, the wider perception still seems to be that dining out is becoming a lot more exorbitant. In May, McDonald’s dispelled reports suggesting that its prices have doubled.

In his post, Joe Erlinger, President of McDonald’s USA said, “Recently, we have seen viral social posts and poorly sourced reports that McDonald’s has raised prices significantly beyond inflationary rates.” He termed these as “inaccurate” while providing data on how the price rise was much more modest and that too because of supply chain issues, higher food prices, and rising labor costs.

Restaurants Are Using AI to Cut Costs

Amid slowing sales and lower profits, restaurant chains have been looking at multiple ways to improve their earnings. Wendy’s for instance has closed several underperforming stores. Food chains are also increasingly looking at artificial intelligence (AI) to cut down on costs. Restaurants are embracing AI in different business functions and Taco Bell is in the process of rolling out AI drive-through ordering to restaurants across the country.

Last year, Wendy’s announced its AI drive-through named Wendy’s FreshAI in collaboration with Google Cloud. Earlier this year, it announced that it would spend $20 million on digital menu boards but the company clarified CEO Kirk Tanner’s comments during the Q4 2023 earnings call and said that it is not planning to have AI-based surge pricing.

However, the AI pivot would take its time to successfully play out for food companies. McDonald’s unsuccessfully tried its hand with what it called the “Automated Order Taker” which was an AI technology that it tested in partnership with IBM. In June, the company ended the trials and would now look at another vendor instead.