Rising beef prices threaten company's profit margin.
UNCONFIRMED: No firm plans to take sandwich off 'Dollar Menu'
According to the Huffington Post, Chicago Tribune and other news outlets, via Reuters, the McDouble has the highest ingredient costs of any item on the McDonald's "Dollar Menu," which makes it a negative financial proposition.
Another strike against the McDouble was the launch of the $1 grilled onion cheddar burger in December. The new star of McDonald's TV commercials requires fewer ingredients — including just one beef patty — meaning better profit margin for the world's largest fast-food chain.
"If the McDouble is all the customer buys, you lose money," said Richard Adams, a former franchisee who now advises the chain's restaurant operators. "Depending on what happens to beef prices, McDonald's management should be open to taking the McDouble off the Dollar Menu."
Some restaurants have already made that move. Prices for the McDouble range from just above a dollar in San Francisco ($1.09) to $1.89 in New York City. The sandwich remains on the Dollar Menu in cities such as Phoenix; Fresno, Calif.; Denver; Seattle; St. Louis; and Washington, D.C., Reuters reported.
Stopping the downward spiral
McDonald's has suffered through two consecutive years of margin declines at its 14,000 restaurants, further prompting the reported Dollar Menu shift, Reuters reported. That, and McDonald's has a habit of reorganizing its Dollar Menu to coincide with food cost spikes. Most recently, in March, cookies and ice cream cones replaced small drinks and small fries on the Dollar Menu, and a new "Extra Value Menu" debuted. Already in 2013, ground beef prices are up 6 to 8 percent, according to John Davie, CEO of Consolidated Concepts.
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