McDonald’s Free Fries Promo Comes as Guests Show Price Resistance
McDonald’s is launching a Free Fries Friday promotion, offering free medium fries to customers who order via the chain’s mobile app and make a purchase of at least $1. The offer begins Oct. 27 and continues every Friday until Dec. 29.
The promotion comes as McDonald’s sharpens its focus on its digital business; in its top six markets, digital sales represent nearly 40% of systemwide sales while there are over 52 million 90-day active loyalty members in those markets. During the company’s Q2 earnings call in July, CEO Chris Kempczinski said the company experiences about a 15% increase in frequency from loyalty members. Frequency has become a critical objective to offset some of the traffic declines and trade down activity happening across the industry.
At McDonald’s specifically, CFO Ian Borden noted in July that its consumers are trading down from premium items to more core and value items, and consumers are buying “a little less” when they visit. Meanwhile, McDonald’s has seen year-over-year visit declines in August and September, according to new data from Placer.ai. Still, the chain’s visits continue to outperform the overall dining segment.
Notably, this promotion comes as Kalinowski Equity Research’s latest McDonald’s Franchisee Survey shows that some operators are experiencing menu price resistance from their consumers. The company raised its prices by about 10% last year to mitigate inflationary pressures, which has driven less items per transaction.
“Customers are getting very stingy,” one owner/operator said in the survey.
Another one noted, “We can only give away just so much with the McApp.”
That said, executives noted on the last earnings call they expect pricing to ease toward the end of the year as inflation continues to cool. McDonald’s reports Q3 results on Monday, Oct. 30.
Placer.ai’s data shows that September visits industrywide were down 4.2% year-over-year, while August’s traffic was down 2.4% year-over-year. As such, McDonald’s certainly isn’t the only chain offering promotions to get more people in the door. Pizza Hut today, for instance, launched a new $7 Deal Lover’s Menu featuring 17 options, including wings, pizza, pastas, Melts, breadsticks and desserts, available for $7 each for customers who buy at least two. Pizza Hut’s value menu comes as Domino’s promotes its Mix & Match Deal – two or more offerings for $6.99 each.
KFC just announced it’s bringing back its two-for-$5 wrap deal next month, while Taco Bell recently brought back its Taco Lover’s Pass and Wendy’s continues to promote its $5 Biggie Bag. These promotions extend beyond QSR as well. Chili’s has brought back its 3 For Me special, including a beverage, appetizer and entrée for $10.99, while Olive Garden has brought back its Never Ending Pasta Bowl. As Q3 earnings ramp up, we can expect to get a stronger pulse on traffic levels and consumer behaviors, and how public restaurant brands are responding.