Fast food giant McDonald’s saw little profit growth in the first quarter of 2013 in large part due to the failure of the Dollar menu, according to the Associated Press.
This is the first time a quarterly drop has occurred in sales for restaurants that have been open for at least 13 months.
In an effort to compete with the marketing maneuvers of Wendy’s and Burger King, McDonalds has been flaunting its Dollar Menu. Analysts fear the move could negatively affect company profit margins.
"That battle for market share has become so critical for the long-term health of business, we're willing to sacrifice that margin," said McDonald’s Chief Financial Officer Peter Bensen.
Company executives spoke with analysts Friday. They expressed the need to continue offering cheaper prices because of the existing restaurant market.
In a survey done by Janney Capital Markets, 25 U.S. franchises who responsible for 180 McDonald’s restaurants, said relations with the fast food chain are lower than the historic levels. Many are complaining about the amount of discounts they are currently being forced to offer to customers.
With McDonald’s new focus on its Dollar Menu since last year, the fast food industry has seen some changes.
Burger King has changed the price of the Junior Whopper to $1.29 and is currently making other marketing moves to stay with the competition.
Last year, Wendy’s also began making changes to its value menu. The company said it's attempting to give consumers a greater amount of options.
Cheaper prices are not the only marketing changes the three fast food chains will have to make. As growing amount of consumers eat at restaurants such as Panera and Chipotle, the major fast food chains might have to switch up their menus.
McDonald’s has already made some changes by offering its new Premium McWraps and a new egg white version of its Egg McMuffin that is scheduled to be available next week.
