McDonald's Empire Bites Back

By Charles Pretzlik

The Telegraph; 27th Feb 1997

Press Index

McDonald's, the world's largest restaurant company, is preparing to launch a hamburger war by slashing prices of its Big Mac in America in an attempt to lure more fast-foodies under its golden arches.

The group is anxious to reverse a 3.5pc decline in same-store sales this year at its 12,200 US restaurants and today is expected to put a jump-start plan, dubbed Campaign 55, to franchisees.

Just months after it introduced its most expensive sandwiches ever, including the $2.19 Arch Deluxe, the company is thought to be suggesting cutting the price of a Big Mac from $1.90 to just 55 cents if diners also buy fries and a drink. Analysts believe it costs franchisees 62 cents to make a Big Mac.

The discounting plan, which would be limited to the United States, is intended to rotate to Quarter-Pounders, McRibs and the Arch Deluxe later.

A company spokesman said yesterday: "McDonald's is on the threshold of an unprecedented value offering that will be good news for our customers, our franchisees and our business, but bad news for the competition."

McDonald's is also expected to propose a guarantee to customers that they will receive their orders within 55 seconds of placing them or get a coupon for a free special sandwich.

Franchisees said yesterday such a delivery promise might be impossible to meet but Dick Adams, chairman of an independent association of McDonald's franchisees, said the plan would be approved because "they are being told it's the only plan available".

Campaign 55 is the brainchild of vice-chairman Jack Greenberg, who took over as head of the US chain in October.

As McDonald's has struggled to fend off competition, a sense of urgency has engulfed its Illinois headquarters as competitors such as Grand Metropolitan's Burger King chain have continued to bite into the market.

Burger King is understood to have enjoyed a 2.6pc rise in US same-store sales last year.

In a statement, it said: "Burger King Corporation is committed to providing products with the best quality, taste and value for our customers every day, not just during special promotions."

In London, Grand Metropolitan shares closed 16 1/2 down at 460 1/2 p.

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