Investors Don’t Like McDonald’s $5 Meal

By Douglas A. McIntyre Published Jul 1, 6:40AM EDT

Investors Don’t Like McDonald’s $5 Meal — © RiverNorthPhotography / iStock Unreleased via Getty Images

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The McDonald’s Corp. (NYSE: MCD | MCD Price Prediction) $5 menu has not impressed investors, perhaps because they think consumers won’t be either.

To attract cost-conscious consumers back to its stores, McDonald’s Corp. (NYSE: MCD) created a $5 menu. “Starting” at $5, people can get a four-piece McNuggets, small fries, a soft drink, and a McChicken or McDouble. With a purchase over $1, people can get large fries.

Wall Street was not impressed. The stock is still down 14% this year, while the S&P 500 is 15% higher. The $5 meal did not move the shares higher.

What happened? The $5 deal is nothing special. Burger King, Starbucks, and even Popeyes came out with similar deals.

The question is whether $5 will bring extra traffic back to these fast-food chains. The National Frozen and Refrigerated Foods Association released research showing that 81% of people cook over half their meals at home. The “Eating at Home” study showed that people use home kitchens for two major reasons. One is healthier food choices. The other is inflation. People said they wanted to “control their budgets” and wanted “healthier-for-me” options.

McDonald’s meals are not considered “healthy.”

People may have already elected not to return to fast-food lines, either on foot or in their automobiles. The $5 incentive isn’t enough of a tipping point. And the deals are for a limited time–whatever that means.

The $5 meal has not impressed investors, perhaps because they think consumers won’t be either.

This Fast-Food Chain Has the Most U.S. Locations, and It’s Not McDonald’s

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.