McDonald’s ending Happy Meal subsidy, possibly increasing price in 2021
The subsidy will end January 1
Happy Meals may cost more in 2021 as McDonald’s has announced it will be ending a decades-long subsidy program in the new year. The brand disclosed the information internally last week.
The subsidy for the iconic kid’s meal averaged to about $300 a month per restaurant. However, it will be ending January 1, 2021.
“We recognize this subsidy has been in place for many years. However, it is no longer fueling growth in the way it once was,” a message viewed by FOX Business from U.S. leadership to its franchisees stated.
Franchisees will be able to offset the subsidy to keep the price the same. (iStock)
The brand has said it plans to discontinue the subsidy, but invest in franchisees in “bold moves to support our restaurant employees.” Throughout 2020, McDonald’s has made investments to help its franchisees, including a $100 million marketing investment, as well as deferred nearly $1 billion in rent fees for its restaurant owners.
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Tensions between some franchisees and corporate have been high, with this recent change, and others, causing some dust-ups as owner/operators will be paying more in 2021, along with potentially covering the $300 in those locations want to keep the cost of the Happy Meal the same.
“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 memo read.
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McDonald’s does not set the prices at franchise locations, which make up 95% of all McDonald’s restaurants.
The pandemic has hurt the business’ dine-in sales as U.S. locations were forced to close due to coronavirus restrictions. However, sales were boosted by drive-thru traffic and digital sales, which led to a stronger than expected third quarter. The company reducing its menu also helped support its operation and profitability.