McDonald's new Dollar Menu means massive price cuts for customers

McDonald's

McDonald's new value menu

• McDonald's new value menu will slash overall menu prices by 15%, according to analysts.
• The new "$1, $2, $3 menu" will offer deals at three price points.
• The revamped version of the Dollar Menu rolls out in early January.

McDonald's much-anticipated new value menu means massive prices cuts for customers.

Credit Suisse found in "anecdotal pricing checks" that McDonald's upcoming "$1, $2, $3 menu" will result in a roughly 15% price reduction across the chain's the full menu.

Hollis Johnson/Business Insider

"MCD's new 1,2,3 value menu appears geared towards recovering this traffic, which is likely to partly come at the expense of check," analyst Jason West wrote in a note on Tuesday.

According to West, some items are already being sold at similar prices, leading up to the launch of the new value menu. Others - including Happy Meals - are going to have their prices slashed by up to 25%.

McDonald's is rolling out the new value menu on January 4.

The $1 items include menu offerings such as the Sausage Burrito, McChicken, and Cheeseburger. Items including the 2-piece Buttermilk Crispy Tenders, Bacon McDouble, and McCafé beverages will be sold for $2, and Happy Meals and Triple Cheeseburgers will cost $3.

Executives have admitted that McDonald's has struggled to attract value-minded customers since killing the Dollar Menu in 2013.

While the McPick 2 has helped drive sales over the past year, a new national Dollar Menu is a major move to win over customers looking for value. The company is throwing a huge amount of weight behind the effort, increasing its already massive national advertising budget by 20% starting in 2018.

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