The fast food price war is heating up in 2025 as McDonald’s (NYSE:MCD) slashes prices on popular meals to bring back budget-conscious customers. With inflation driving up food and labor costs in recent years, many low-income consumers have cut back on dining out. To win them back, McDonald’s is rolling out new deals that could pressure competitors to follow suit.
Starting September 8, McDonald’s will introduce Extra Value Meals, featuring classics like the Big Mac, Egg McMuffin, and McCrispy sandwich paired with fries or hash browns and a drink. These meals will cost roughly 15% less than ordering the items separately.
As part of the rollout, customers can grab an $8 Big Mac meal or a $5 Sausage McMuffin meal for a limited time—though locations in California, Alaska, Hawaii, and Guam will add $1 more.
Why McDonald’s Needs a Value Strategy
McDonald’s (NYSE:MCD) has seen a steady decline in visits from households earning under $45,000 per year. CEO Chris Kempczinski admitted that rising menu prices have damaged the company’s reputation for affordability. For example, a 10-piece Chicken McNugget meal near McDonald’s Chicago headquarters costs over $10, a steep jump from just a few years ago.
Between 2019 and 2024, the average McDonald’s menu price rose 40%, largely due to higher labor, packaging, and food costs. Customers noticed, and many started cooking at home or trading down to cheaper alternatives. While same-store sales grew 2.5% in the April–June quarter, most of that came from higher prices, not more customers.
The company knows its long-term growth depends on restoring its image as an affordable option. “If you’re that consumer, you’re seeing combo meals over $10—that shapes value perceptions in a negative way,” Kempczinski said in an August call with investors.
Competitors Join the Fast Food Price War
McDonald’s isn’t alone in this fast food price war. Rival chains are also testing promotions to regain foot traffic. Domino’s Pizza (NYSE:DPZ) recently launched its “Best Deal Ever,” offering any pizza with unlimited toppings for $9.99.
Earlier in 2024, McDonald’s tested a $5 Meal Deal with a McDouble or McChicken plus fries and a drink. That deal proved so successful it was extended through the summer. The company also introduced a buy-one-get-one-for-$1 promotion, which will remain alongside the new Extra Value Meals.
Industry experts note that overall U.S. fast food traffic dropped nearly 1% in the second quarter, according to Revenue Management Solutions. But the pace of menu price hikes slowed, showing chains are already adjusting with more aggressive promotions.
What This Means for Investors
For investors in McDonald’s (NYSE:MCD), Domino’s (NYSE:DPZ), and other quick-service restaurant stocks, the fast food price war presents both risks and opportunities.
On one hand, lower prices could squeeze margins in the short term, especially with high labor and ingredient costs. On the other, offering better deals may revive customer traffic, helping sales volumes recover.
If McDonald’s successfully balances value and profitability, it could strengthen its competitive edge. The company’s global brand and scale give it more flexibility to absorb discounts compared to smaller rivals. Meanwhile, Domino’s may benefit from consumers trading down from dine-in restaurants to affordable pizza deals.
The Bottom Line
The launch of McDonald’s new Extra Value Meals signals a brewing fast food price war. Rising costs and shifting consumer perceptions forced chains to rethink their strategies. As McDonald’s and Domino’s roll out aggressive promotions, more competitors may be compelled to join in.
For customers, this means a welcome return of affordable meal deals. For investors, it’s a test of which brands can win the loyalty battle without sacrificing profitability. The fast food industry in 2025 is shaping up to be a high-stakes contest where value—and volume—decide the winners.
Featured Image: Unsplash
