Naperville Business Lawyer on Fast-Food Chain’s Price Reductions

prices, Naperville business law attorneyIf you were asked to name the first fast-food brand that came to your mind, there is a very good chance that you would respond with “McDonald’s.” The 77-year-old franchise proudly boasts on its marquees around the world that it has served “billions and billions” of its famous hamburgers throughout the company’s history. Over the last few years, however, it seems that business in the fast-food industry has dropped somewhat, but company officials have announced a plan they hope will bring customers back in greater numbers.

As a business law attorney, I understand and appreciate the need for creative promotions and exciting new plans. When developed and executed properly, such strategies can certainly be used to boost sales and reinvigorate a company’s customer base. This idea applies to businesses of any size, but it will be interesting to see how one of the largest companies on the planet will benefit from a relatively simple idea.

Cutting Drink Prices

Last year, McDonald’s focused its marketing efforts on chicken sandwiches and cheeseburgers in the wake of discontinuing its popular Dollar Menu. The chain also began offering popular selections from its breakfast menu at any time of the day. Unfortunately for the company, last year’s promotions were not enough to reverse slowing growth. This year, fast-food giant will be trying something different.

Beginning in April, all soft drinks will be just $1.00 for any size. In addition, small drinks from the gourmet-sounding McCafe menu will be just $2.00. Soft drinks currently range up to about $2.00 depending on the market, and small McCafe beverages in Chicago vary in price from about $2.69 to $3.09.

Why the Shift to Drinks?

It may seem counterproductive for a restaurant chain to slash prices on high-margin items such as sodas and beverages, but experts indicate that McDonald’s may be trying to stay ahead of the curve. The minor slump in sales over the last few years has occurred in spite of lower commodity prices, a trend that is showing signs of going the other way. With more margin in which to operate, dropping drink prices may be a relatively safe move if commodity prices do start heading back up.

Of course, many customers purchase relatively few soft drinks a la carte; instead they buy meals which include a soda. McDonald’s has not indicated that it would be adjusting the prices of its Extra Value Meals, so the promotion may be moot for some.

Work With a Business Lawyer

One of the most difficult things a business owner must do is decide when to take action and when to simply try to weather a downturn in the ongoing business cycle. Sometimes, you may be doing everything exactly right yet sales continue to struggle. In other cases, your profits may soar in spite of mistakes and hastily-made decisions.

An experienced Naperville business law attorney can help you determine the best course of action for your company no matter what challenges you may be facing. Call The Gierach Law Firm at 630-756-1160 for a confidential consultation with a member of our team today.

 

Sources:

Fortune

Chicago Tribune

ABC-7 Chicago