A lot of people think that McDonald’s Corp. could offer deals like the ones its restaurants in other countries do since their second-quarter earnings were not as good as expected.
More specifically, McDonald’s can be found in Australia, Germany, and France.
MCD 2.95% has released a platform called McSmart that has value choices. Like a McSmart meal, which has two sandwiches (burger and chicken) with fries and a drink. This is different from the $5 American McDonald’s value meal, which has a sandwich, four Chicken McNuggets, fries, and a drink.
From social media posts like this one, it looks like the McSmart meal has really taken off in Australia:
@grandpa007 McDonald’s McSmart Meal @McDonald’s Australia #grandpa #grandpa007 #fastfood #value #cheapeats #funny #mcdonalds #fyp ♬ In the Mood – Glenn Miller
During its earnings call on Monday, McDonald’s talked about the McSmart platform. The company said that it has been a key part of its value strategy in Germany and is now moving to other countries.
The U.S. president of McDonald’s, Joseph Matthew Erlinger, said, “As we scale best practices across the system, markets like France and Australia have adopted their own version of the McSmart platform and early results have been encouraging.” This was recorded by AlphaSense.
That makes it possible that the U.S. will be the next country to use the McSmart brand, whether it’s for a specific meal deal or a wider range of low-cost choices. Eric Gonzalez, an analyst at KeyBanc Capital Markets, said it’s clear that McDonald’s never meant for the current $5 meal deal to be a lasting deal, so the company needs to come up with something else.
Gonzalez also said that McDonald’s $1, $2, and $3 Dollar Menu isn’t as well known as it used to be. “They’re looking for someone to take its place,” he said.
So, it’s hard to say what a McSmart menu might look like in the U.S. if McDonald’s goes that way. Many years of high inflation in the U.S. have caused prices to level off, but experts say it’s still hard for owners to make any value options work.
At the same time, McDonald’s has made it clear that it can’t ignore the fact that people today almost demand cheap food choices.
“Our only goal is to keep giving our fans great value,” Erlinger said.
A marketing expert and professor from Florida named Craig Agranoff thinks the McSmart platform is a great idea because it makes people feel like they’re making a good decision when they eat out and aren’t settling for something less than ideal.
He said, “It works as a brand.”
Mark Kalinowski, an analyst for the fast food business, also said that McSmart is a good name because it only has two syllables, rather than something longer.
Kalinowski pointed out that McSmart is “easy to say.”
It is common for McDonald’s to take menu ideas from one area or even just one restaurant and use them across the whole chain. One McDonald’s owner and operator in Santa Barbara, California, came up with the idea for the Egg McMuffin.
But some experts say that an idea that does well in another country might not do so well in the U.S.
Steven Hall, a restaurant expert and publicist, said that Americans might need to see the word “value” right away and that McSmart might not be the best way to brand itself.
He told them, “You have to see what each market does.”
McDonald’s isn’t just trying out the McSmart platform and the McSmart meal as deals and value choices in other countries. For instance, in Canada, McDonald’s has a famous deal where you can get a cheap coffee.
Steve Zagor, a restaurant consultant from New York, said that a plan to sell coffee for a dollar could work very well in the U.S. He also said that it could work for McDonald’s because coffee isn’t too expensive to make, so even at that price, there’s still a good chance of making a profit.
Zagor also said, “It’s a legal drug. Americans can’t get enough coffee.”
MarketWatch asked McDonald’s for a word on its future value options, but the company didn’t answer.
