The cost of price hikes! McDonald's stock plunges 30% in six months, set to post its worst performance since 2002.

Price hikes alienate customers. McDonald’s predicament stems fundamentally from pricing. Post-pandemic, McDonald’s persistently raised menu prices to offset surging costs for beef, labor, and fuel. According to The Economist’s Big Mac Index, the U.S. Big Mac price rose approximately 23% between 2019 and end-2025. Meanwhile, consumers—squeezed by inflation and rising interest rates—are tightening their belts and growing increasingly selective about every dining expense. Jacob Aiken-Phillips, an analyst at Melius Research—the only firm among Bloomberg-tracked analysts assigning McDonald’s a “sell” rating—stated bluntly: “They’ve raised prices significantly. McDonald’s is no longer perceived as offering the best value in the quick-service restaurant sector. I can go to Texas Roadhouse and enjoy a genuine sit-down family meal for roughly the same price.” In 2024, a social media post showing a Big Mac meal priced at $18 went viral, sparking widespread backlash. McDonald’s responded that this was merely an isolated pricing instance at one location among its more than 13,700 U.S. restaurants. Competitors seize the opportunity McDonald’s pricing pressure appears even starker against competitors’ strong performance. Restaurant Brands International’s Burger King posted an 8.5% increase in U.S. comparable sales for its latest quarter—exceeding market expectations—driven largely by its revamped Whopper and Star Wars co-branded campaign. Taco Bell, under Yum! Brands, reported a 7% rise in same-store sales, with its $5, $7, and $9 meal bundles effectively boosting foot traffic. In terms of stock performance, Burger King’s parent company rose 5% year-to-date, while Taco Bell’s parent declined 8.4%—both underperforming the S&P 500’s 13% gain, yet still far outpacing McDonald’s 23% year-to-date drop. Franchisee resistance hampers discount rollout McDonald’s value strategy also faces internal headwinds. Approximately 95% of McDonald’s U.S. restaurants operate as franchises. Franchisees widely resist promotional discounts—such as this year’s “10 items under $3” meal bundle—because although such promotions drive volume, they directly squeeze already-thin operating margins. Will the ‘Next’ initiative work? Amid mounting pressures, McDonald’s launched a new strategic initiative dubbed “Next,” aiming to revitalize the brand through technology investments, store renovations, and reopening children’s play areas shuttered during the pandemic.

Restaurants aggressively push 'broke-person meals'—selling more but losing money, yet unable to stop.

During the same period, McDonald’s launched a two-week ‘$10 Burger Meal’ promotion, offering a burger plus one side dish or dessert for $10. This marks McDonald’s third ‘$10 Burger Meal’ promotion this year; the duration has extended from one week to two weeks, and the deal has intensified—from initially just $10 for a single burger to now a two-item combo (burger + side dish or McFlurry). Coupled with Burger King’s weekly Wednesday $9.90 meal deal, Western fast-food giants have successfully driven the price of so-called “broke-person meals” below $10. △ Image source: Hongcan Network As more players join this fierce competition, netizens who’ve tasted the sweetness of “broke-person meals” are no longer satisfied with pre-packaged brand combos—and are instead devising ever more creative “broke-person” ordering strategies. For example, Mi Cun Ban Fan’s “broke-person meal” ordering guide has gone viral: order a $3 bowl of rice, pair it with complimentary seaweed soup and kimchi, and enjoy unlimited rice refills—filling up deliciously and affordably. Alternatively, order the $9 Kids Tuna Rice Bowl, which includes meat and vegetables for balanced nutrition in one meal. Or, at He Fu Lao Mian, order a $9 egg-and-vegetable soup plus complimentary noodle refills—guaranteeing a satisfying full meal. Some netizens have even engineered their own “Hai Di Lao Broke-Person 8-Piece Set,” creatively maximizing the hotpot base, condiment bar, and complimentary snacks. On Xiaohongshu, related posts have garnered over 15,000 likes and nearly 10,000 comments. To date, the hashtag “broke-person meal” on Douyin has accumulated over 800 million views. 02 Behind the ‘broke’: booming sales—but slim profits At its core, the “broke-person meal” represents a relatively dignified low-price strategy for brands. While generating positive sentiment and traffic on social platforms, it also delivers tangible order volume and foot traffic. For instance, Burger King’s $9.90 Wednesday burger meal triggered a short-term surge in orders. Meituan data shows that Burger King sold over 180,000 units of its $9.90 burger meal within three months of launch. Yum China’s “Crazy Thursday” campaign propelled Thursday sales beyond weekend levels. According to Times Finance, a Yum China executive stated that “Crazy Thursday” lifted Thursday’s sales by 50% compared to other operating days. Luckin Coffee’s year-long $9.90 campaign similarly delivered strong user acquisition. Per its financial report, Luckin added over 95 million new transacting customers in 2023, with average monthly transacting customers reaching 48.37 million—a 124.1% year-on-year increase. Correspondingly, revenue grew too: Luckin’s total net revenue in 2023 reached RMB 24.903 billion, up 87.3% year-on-year. △ Image source: Hongcan Network Yet while brands sell enthusiastically, they simultaneously face quiet struggles. Financial reports show that in Q1 2024, Yum China’s operating profit and margin both declined—marking its first year-on-year net profit drop since Q4 2022. Specifically, KFC’s operating profit stood at $372 million, with a restaurant margin of 19.3%, down 1.9 percentage points year-on-year. Pizza Hut’s operating profit was $47 million, down from $55 million a year earlier, with a restaurant margin of 12.5%, down 1 percentage point year-on-year. Yum China attributed the margin declines for both brands to “increased offerings of high-value-for-money products to drive customer traffic growth.”

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