Why McDonald's Is Bringing Back the Dollar Value Menu

Let's be frank: Value menus based on dollar price points are a loss leader in the quick-service restaurant (QSR) industry. Their primary purpose is to draw traffic into stores, where, if a restaurant's blend of core items and limited time offers (LTOs) works its magic, customers will spend more than a dollar or two.

McDonald's Corporation (NYSE: MCD) this week announced its long-awaited value menu revamp, which is slated to go into effect nationwide on Jan. 4. After a two-year run of promotions centered on $5 and $3 price points (the "McPick" 2 for $5 and 2 for $3 menus), the world's largest burger chain will offer a value menu spanning the $1, $2, and $3 levels.

Current McDonald's value menu aficionados will recognize continuity in that items such as cheeseburgers, McChicken sandwiches, and sodas, already typically sold for a little over a buck, will now anchor the $1 price point.

Source: Fool.com