HOW THE ECONOMY CRISIS EFFECTS MCDONALDS

Bye Bye Dollar Menu

Cheap Food! Yay!

We all have a lot to worry about indeed when the US dollar loses value against the Happy Meal

McChicken Sandwich!

The credit crisis is causing McDonald’s to have less items on their Dollar Menu.

Uh-oh! Naked Burger!

In June 2008, Advertising Age reported that McDonald’s franchisees were frustrated that the company was holding onto its dollar menu platform.

The chain responded by testing changes to its double cheeseburger. Some McDonald’s operators served it with only one slice of cheese and modified the name to double hamburger with cheese. Other stores dropped the cheese altogether, according to an article in the Wall Street Journal.

Extinction of the Dollar Menu

Irwin Kruger, a 40-year McDonald's franchisee with locations in Times Square and Madison

Square Garden, said he offered the dollar menu for years but saw his sales slip and

pulled it. "By offering the dollar-menu products that were being offered nationally,

our average check went down because customers were trading down to the more

attractive prices, but we were not attracting enough new customers to make up the

difference," he said.

Quality Goes Down

“A few years ago they'd always taste fresh and delicious.”…

“I think the quality of McDonald's value menu has really gone down.”

Current double cheeseburger on the Dollar Menu.

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What You Used to Get

Expensive Transportation

The cost of transporting the foods to McDonald’s franchises goes up and then they will have to raise the price of the Dollar Menu items along with the other items.

Rising Prices

“At least 2 McDonald's where the dollar menu no longer includes the Double Cheeseburger

or the McChicken Sandwich."

Both these sandwiches are now priced $1.19.

Rising Prices

Indeed, the price of food ingredients has risen sharply in recent years. Since the start of

2006, rice is up more than 200%, wheat more than 130% and corn has increased 125%.

Meanwhile, the World Bank has stated that average food prices are up 250% since 2002. Unfortunately, the future also looks bleak. According to projections from McDonald's itself, the price of cheese should increase

another 13-14% in 2008 alone.

“Shrinkage”

The company faces very difficult choices as it struggles to maintain cost and quality. Will

McDonalds' costumers soon borrow a slogan from Wendy's and ask, “Where's the beef”? To maintain its dollar menu, diners at McDonalds

may have to look forward to eating hamburgers containing a series of ever-

smaller concentric circles as their patties suffers from the dreaded “shrinkage.”

Unfortunately, to maintain its dollar menu, the company may have to become a microcosm of

America 's shrinking standard of living.

Sales

Launched in 2003, the Dollar Menu has been a key driver of sales at the 14,000 U.S.

McDonald's restaurants and has helped it ride out dips in consumer spending. But

recently, franchisees have complained that the menu has brought too much unprofitable

traffic into their restaurants.

Saving Money

Due to the economy crisis, people are starting to live more on a budget. This changes causes people to eat out less.

Obesity Rates

There is one good thing about this change. Since Americans will be eating out less, the obesity rate will go down.

Created By:

Jaci GoodwinMariah Richards

Barbie Farley