McDonald's Wrestles with Pricing Woes and Franchisee Tensions

In the past year, McDonald's has grappled with a dual challenge that threatens to undermine its fast-food dominance. On one hand, post-pandemic inflation has driven up average prices at McDonald's locations in the U.S. by a staggering 40% since 2019, with viral videos of $18 Big Mac combos sparking outrage among budget-conscious consumers.

Recognizing this affordability crisis, McDonald's took action in July 2024, launching a $5 meal deal and pairing it with a "buy one, add one for $1" offer through its mobile app. The company also enlisted the help of wrestler-turned-actor John Cena to promote its new "McValue" menu. These efforts, combined with a successful Minecraft Movie Meals promotion, have helped McDonald's regain its footing, with the company reporting a 3.8% increase in global same-store sales and a robust 47% operating margin in the second quarter of 2025.

However, McDonald's must now navigate a delicate balancing act with its franchisees, who manage 95% of the company's U.S. locations and an even larger share of its international outlets. While the franchise model shields McDonald's from the direct impact of rising costs, it also means the company must carefully manage the profitability of its franchisees, who are permitted to set their own prices. Urging them to prioritize value-driven offerings like the McValue menu could potentially squeeze them to the breaking point, especially as their own expenses continue to balloon.

As McDonald's rides the wave of its recent resurgence, investors and industry analysts will be closely watching to see if the company can maintain this sweet spot, or if the tensions between affordability and franchisee happiness ultimately lead to a souring of the Golden Arches' fortunes.