Dollar Damage

20 Apr 2006

Four years ago McDonald’s stock had fallen by 56 percent in ten months. Since then its revenue has grown by a third. What has caused this turnaround?

In the last few years, in an attempt to shed its reputation as unhealthy, the fast food chain has introduced ‘healthy’ items like salad and fruit.

These new additions are not the cause of the change of fortunes of the fast food giant. In 2002 the much-advertised Dollar Menu was introduced, where items such as double cheeseburgers, McChicken sandwiches, French fries and pies are priced at one dollar, and these items have now become the chain’s bestsellers. The Dollar Menu generates much greater revenue than the considerably more expensive salad and fruit options.

Wendy’s and Burger King are following in McDonald’s footsteps and now offer their own version of the Dollar Menu. These deals are aimed at younger, lower-income and ethnic consumers and are actively contributing to health problems such as obesity and diabetes afflicting these segments of the US population.

Source: International Herald Tribune

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