Lovin’ It: Snack Wraps Bring Smiles Back to McDonald’s Investors (and Customers)

2000s kids can be thanked in part for strong third-quarter sales at McDonald’s, where the recent relaunch of chicken Snack Wraps was a cluckin’ success. McD’s said 20% of customers added a $2.99 Snack Wrap to their order in the product’s first month back on sale, exceeding expectations. 

As nostalgic millennials nom’d on the new-again menu item, the fast food giant’s same-store sales climbed 3.6%, rebounding from a 1.5% fall this time last year. Despite the restaurant’s earnings missing analysts’ expectations overall, its shares ticked up as investors banked on value items to bring in budget-conscious customers.

Happy Meals, Tough Times

McDonald’s is struggling to sell chicken nuggies and fries to customers who are feeling increasingly cash-strapped:

• Chairman and CEO Chris Kempczinski warned yesterday that economic pressures will keep weighing on the chain’s sales into 2026. The chain has been losing patronage for the past two years from lower-income consumers, who are avoiding going out to eat and instead cooking at home. Concerns about SNAP benefits have sparked fears that McDonald’s and other restaurants may be increasingly cut off from the dining dollars of lower-income households. 
• Promotions like the $2.99 Snack Wrap, along with the Extra Value Meals and McValue Menu that McDonald’s rolled out over the past year, are part of the fast food company’s strategy to reel in customers with deals. Higher-income consumers who’re trading down from chains like Chipotle and Cava (both have also seen sales slump) are also on the hunt for deals like these. 

Cheap’s Costly: To support its deals, McDonald’s is subsidizing its value-driven efforts. CFO Ian Borden said the chain will pay franchisees back half the cost of price reductions on Extra Value Meals; those cuts totaled $15 million in September and will cost $75 million for the fourth quarter. The fast food chain also put $40 million toward marketing its Extra Value Meals. So while deals are bringing in customers and boosting same-store sales, they could be cutting into profits. Net income for McDonald’s grew just 1% in the third quarter. McDonald’s and other restaurants started rolling out value meals to make sure economic pressure didn’t choke orders, but at some point, they simply need customers to feel more financially secure and trade up their homemade PB&J for a Big Mac.