The Battle for Value and Loyalty in Fast Food
- RevSignAI
- Sep 8
- 3 min read
Updated: Oct 6
The fast-food industry is at a turning point. McDonald's has announced the reintroduction of its "Extra Value Meals" in the United States with a 15% discount. This is a direct response to a drop in traffic among lower-income consumers, who no longer perceive the chain as affordable due to price increases. Similarly, in Argentina, the price of the Big Mac has experienced a sharp decline, underscoring the pressure of inflation and the challenge of maintaining margins in volatile markets.
This is a clear sign of the economic pressures facing consumers and their direct impact on discretionary spending. The reintroduction of value deals by McDonald's is a strategic attempt to win back a customer base that has become more price-sensitive. Price increases of nearly 40% between 2019 and 2024, in line with rising costs for food, labor, and packaging, have eroded the brand's reputation for value, causing meals to regularly exceed $10. This move could be the catalyst for a broader "price war" in the industry, where competition focuses on affordability rather than product innovation.
The situation in Argentina offers a notable contrast. The sharp drop in the price of the Big Mac, reported between January and July 2025 according to the Big Mac Index, suggests an aggressive pricing strategy to maintain demand in a high-inflation environment or even a possible government "subsidy." This phenomenon shows that the problem of price sensitivity isn't limited to the United States. In volatile markets, the difficulty of maintaining healthy margins forces companies to make radical pricing decisions that can distort market indicators and challenge profitability. McDonald's ability to offer these value menus with a 15% discount isn't solely based on market pressure; it's also built on strategic investments in AI to optimize operations and app personalization, allowing the company to minimize errors and improve efficiency, thus reducing costs to offset lower margins. Competitors who lack a similar technological infrastructure and react simply by lowering prices will face a greater risk of pressure on their margins.
The reintroduction of value menus with a discount of up to 15% places direct pressure on McDonald's profit margins. The total impact on revenue will depend on sales volume and the elasticity of demand. However, the popularity of their previous "$5 Meal Deal" and the extension of this offer over the summer suggest that the strategy can be effective at regaining traffic from lower-income customers. For competitors, this move represents a significant risk of market share loss, especially if they lack the ability to implement similarly aggressive pricing strategies or to support their operations with technology to protect their margins.
Recommendations
Develop a Flexible Digital Value Offer: Prioritize the creation of value menus exclusive to the mobile app, using data analysis to personalize the offer for each customer. Research and develop product formats that allow for cost reduction without sacrificing the perception of quality.
Focus on Value Proposition, Not Just Price: Develop marketing campaigns that highlight convenience and the customer experience, rather than focusing solely on a low price. Use the app for personalized and geo-targeted notifications that offer specific deals to price-sensitive customer segments.
Implement a Dynamic Pricing Strategy with AI: Conduct an analysis of the price elasticity of demand for your products in different markets. Use AI and Big Data platforms to dynamically adjust prices and respond nimbly to economic fluctuations and competition, thereby protecting margins.
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