Value meals
Price ($)
Food & Paper Cost ($)
Gross Margin (%)
Quarter Pounder with Cheese
3.74
0.71
81
Big Mac
3.95
0.75
81
Grilled Chicken
4.24
1.06
75
Double Cheeseburger
3.78
0.68
82
- What is the expected relative contribution of the Value Meal to restaurant revenues and gross margins using the following assumptions?
- What issues should McDonald’s consider before implementing the Dollar Menu?
McDonald’s would have investigated the reasons behind the rising number of customers who ordered individual menu items as opposed to complete meals. These reasons could be tough economic times, inflation, a decrease in the consumer’s disposable income. Another issue is that they were only depending on the market changes occurring in Southern California instead of focusing on the whole of the American population. This means that the changes being made were somehow biased.
- What changes if any would you make to the Dollar menu proposal and why? If none, explain why.
I would only propose a few items for the dollar menu. Especially those items that faced stiff competition from the franchisees like the Big N’ Tasty. This would still guarantee the above-average profit that the franchisees enjoy from the market sales.