MCDONALD'S is ending Happy Meal subsidy – and the cost of the iconic meal may soar as a result.
Executives confirmed that the kids' meal – which comes with a free toy – may cost more in 2021 internally last week at a meeting with US franchises last week, it was reported on Tuesday.
McDonald's Happy Meal subsidy reportedly averaged to about $300 a month per restaurant – but it's ending on January 1, 2021, escalating tensions between restaurant operators and the fast food giant.
Fox Business obtained a memo yesterday from McDonald's bosses in the USA to its restaurants.
It read: “We recognize this subsidy has been in place for many years. However, it is no longer fueling growth in the way it once was."
“We remain committed to the family business and believe there are ways for owner/operators to help offset the subsidy, which amounts to an average of $300 a month per restaurant."
The meal usually costs around $3.76 nationally but this could now increase by 20c or more to offset the price of it, according to the Wall Street Journal.
Although it's discontinue the subsidy, the brand said it will be investing in McDonald's franchisees instead.
Leaders said this entailed “bold moves to support our restaurant employees.”
Investments its made to franchisees this year include a $100 million marketing investment and deferring $1billion in rent fees for its restaurant owners struggling during coronavirus crisis.
“The family business is absolutely a priority. We just believe the dollars are better invested elsewhere,” said Chief Field Officer for McDonald’s USA Charlie Strong told the WSJ.
Despite this, there is some tensions between in several franchisees and corporate due to this menu change, as well as technology investment fees, which it will be billing $423 monthly for 12 months from March 2021.
The fact that owner/operators will be forking out more money in 2021 and paying $300 in the McDonald's locations that don't want to get rid of the beloved Happy Meal has not gone down well at all restaurants.
The Sun contacted McDonald's for comment on Wednesday.
McDonald’s doesn't set the prices at franchise locations and this makes up about 95 percent of all their restaurants.
Although their eateries endured closures like other small businesses, their drive-thru option boomed as people socially distanced during the pandemic.
McDonald's enjoyed a strong third quarter and reducing the menu may help help them get more profitable.
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