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Investing.com - McDonald’s (NYSE:MCD), the $225 billion fast-food giant with a robust 57% gross profit margin, plans to lower combo meal prices on core menu items to improve value perceptions, according to a Wall Street Journal report. According to InvestingPro, the company maintains a "GOOD" financial health score, suggesting it’s well-positioned to implement such pricing strategies.
The fast-food giant and its franchisees have agreed to maintain combo meal prices at 15% below the cost of purchasing items individually, representing a deeper discount than the current 10-11% average, based on Raymond (NSE:RYMD) James research.
The new pricing strategy, scheduled to begin in early September, will continue through the end of 2025, with McDonald’s agreeing to subsidize franchisees who lose money on the discounts after accounting for potential sales increases.
McDonald’s will also introduce Extra Value meals priced at $5 and $8 in September and November, with the $8 Big Mac Meal or McNuggets Meal representing approximately a 20% discount from current pricing.
Raymond James, which maintains a Market Perform rating on McDonald’s stock, notes that their recent pricing study across the top 25 U.S. markets found the average price for a Big Mac Meal is $10.25 and a Quarter Pounder with Cheese Meal is $10.20.
In other recent news, McDonald’s and its franchisees have agreed to discount eight popular combo meal offerings by 15%, as reported by the Wall Street Journal. The fast food chain will also introduce meal specials priced at $5 and $8 as part of this pricing strategy. Meanwhile, Stifel has reiterated its Hold rating on McDonald’s stock, maintaining a price target of $300. Following the company’s recent earnings report and 10-Q filing, Stifel has updated its financial model for McDonald’s. The investment firm raised its 2025 earnings per share estimate to $12.39, up from the previous estimate of $12.26. These developments come as McDonald’s continues to adjust its pricing and financial outlook.
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