Cash-Strapped Consumers Flock To McDonald’s On $5 Meal Deal 

Let’s begin with our note from early May titled “McDonald’s Admits Consumers Are Broke With Planned Reintroduction Of $5 Meal Deal.”

Four weeks after the meal deal began at most McDonald’s locations across the US, an internal memo obtained by Bloomberg reveals that it will be extended due to an overwhelmingly positive response.

About 93% of McDonald’s locations have committed to selling the bundle past the initial four-week window that started June 25, according to a memo seen by Bloomberg News. The timetables will vary across the country, with some locations planning to make it available through August.

Early performance indicates the meal deal “is meeting the objective of driving guests back to our restaurants,” McDonald’s said in a message signed by Tariq Hassan, chief marketing officer, and Myra Doria, national field president. “Driving guest counts ultimately propels our business and is the key to sustained growth,” they added. -Bloomberg

In other words, McDonald’s abrupt shift to debut a meal deal about one month ago directly responded to cash-strapped consumers pressured by elevated inflation and high interest rates. 

McDonald’s move to extend the meal deal through the end of the year shows executives at the burger chain understand the consumer slowdown will persist.

McDonald’s is looking to bolster its “affordability plans through the rest of year,” according to the memo, including the potential to extend the current meal deal for an even longer period. It is also looking at extended hours of operation to capture demand during off-peak hours.-Bloomberg

We’ve detailed for months about the onset of a consumer slowdown:

Goldman Tells Top Clients To Start “Shorting The Middle-Income Consumer”

Walmart, Target Unleash Price-Cut Tsunami As Working-Poor Hit Brick-Wall

Goldman’s Commentary On Consumer Health Is An Ominous One

“Did Something Change?”: Goldman Trading Desk Warns Hedge Funds Are Suddenly Dumping Consumer Stocks

Restaurant Stocks Slide As Wall Street Sours On Consumer

Meanwhile, the New York Federal Reserve Bank’s recession probability remains over 50%, signaling higher odds for a hard landing in the next 12 months. 

The latest BofA Fund Managers Survey showed the first interest rate cut could come as soon as mid-September. 

Let’s not forget.

Read more on Bofa Michael Hartnett’s note about coming rate cuts and various types of economic landings (read: here).