McDonald's launches a 9.9 yuan "Hamburger Revolution"

Author | Zheng Qiao

Editor | Zhou Zhiyu

The "price reduction trend" of 9.9 yuan has spread from the milk tea industry to the hamburger industry, intensifying the price war in the fast food industry. In such a market environment, almost all food and beverage brands are launching significant discount activities to attract consumers.

Burger King China announced the launch of the "9.9 Yuan Era" burgers starting from August 5th, offering a burger for only 9.9 yuan each week. Previously, McDonald's launched the "10 yuan burger" promotion, KFC also introduced a 9.9 yuan burger, and Tasting put up multiple low-priced combo meals including two burgers for 14.9 yuan on various platforms.

Some bloggers have even compiled a "poor man's meal plan," guiding consumers on how to enjoy different discounts from Monday to Sunday: for example, McDonald's member day on Monday; Tasting's "buy one get one free" for members on Tuesday; Pizza Hut and Domino's Pizza at 30% off on Wednesday; KFC's "Crazy Thursday"...

In addition to launching low-price promotional activities, food and beverage companies are actively promoting their "paid membership system."

Wall Street News found during a visit to a McDonald's store in Lujiazui that the store staff were working hard to attract customers to register as members in the store. Once customers successfully register in the store, McDonald's will give small gifts as rewards.

"This may be due to the pressure of KPI targets." A McDonald's fan said that he has been purchasing McDonald's membership services for two consecutive months, with a monthly fee of 19 yuan. As a member, he can not only waive the 9 yuan delivery fee, but also enjoy exclusive member prices. He did the math: just ordering delivery once or twice, the saved fees can basically offset the membership fee.

The "2024 Hamburger Flavor Trend Observation Report" jointly released by Weihao Mei and Eleme pointed out that under the influence of various factors, the increasing number of players entering the catering track in the past two years has intensified competition. Coupled with the increased sensitivity of consumers to prices, cost-effectiveness has become one of the decisive factors for food and beverage brands.

However, this price war is not without consequences. Some consumers have noticed that as prices drop, the quality of food seems to be gradually changing. They mentioned that although fast food is now cheaper, compared to before, the quality has decreased, "it doesn't taste as good as before."

On July 29th, McDonald's released its second quarter and first half of 2024 performance report. In the second quarter, McDonald's revenue was $6.49 billion, slightly down from $6.498 billion in the same period last year; net profit was approximately $2.022 billion, a 12% decrease year-on-year. Both revenue and profit did not meet expectations.

A relevant person from the China Cuisine Association previously stated that the continuous intensification of price wars, homogenized competition, and cost pressures are among the major factors leading to the current situation of "increasing revenue but not increasing profits" in the catering industry. As dining consumption increasingly returns to the masses, food and beverage companies need to change their business strategies and accurately grasp consumer positioning Against this backdrop, fast food brands all hope to gain a foothold in the Chinese market. McDonald's China plans to break through 10,000 stores by 2028, KFC plans to reach a total of 20,000 stores by 2024, and Burger King has set a plan to open 200 new restaurants in the Chinese market each year.

According to Wall Street News, McDonald's China plans to invest 4 billion RMB in the next five years for digital research and innovation to better serve customers, restaurants, and enterprises.

The new building of McDonald's China Technology R&D Center was officially put into use on August 6th, located in Nanjing, with a total construction area of over 6,500 square meters, expected to accommodate over 450 technical experts. To achieve the goal of increasing to 10,000 restaurants by 2028, McDonald's will rely on digital construction, using data analysis to make precise decisions from site selection to operation.

Over the past three years, McDonald's China's R&D center has independently developed information systems including apps, RGM Boss, and digital food safety, which have been implemented in over 6,200 restaurants.

How long will the price war in Western fast food last? This is still an unknown, but with the continuous development and transformation of the fast food industry, the future fast food market will also become more diversified and personalized. The price war may just be the beginning of industry transformation