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McDonald’s Happy Meals may see a price hike in the new year

Happy Meal price hike: McDonald’s will end decades-long $300 a month subsidy for the children’s meal on January 1 because ‘it no longer fuels growth’

  • McDonald’s will end its decade-long subsidy for Happy Meals on January 1
  • The company had paid roughly $300 a month to its 14,000 US locations to subsidize the cost of the toys included in the Happy Meals
  • The children’s Happy Meals sell for an average of $3.76 nationally
  • Franchisees may now raise the price by 20 cents or more 
  • ‘We recognize this subsidy has been in place for many years. However, it is no longer fueling growth in the way it once was,’ McDonald’s leaders said 

McDonald’s iconic Happy Meals may see a price hike in the new year as the company announced it will end its decades-long subsidy for the popular children’s meal. 

The fast-food chain announced internally that it will end the roughly $300-a-month subsidy it paid to its 14,000 US locations for years to subsidize the cost of the toys included in the Happy Meals on January 1, 2020.

The children’s Happy Meals sell for an average of $3.76 nationally. Franchisees may now raise the price by 20 cents or more to offset the cost, according to the Wall Street Journal

The price hike has exacerbated tensions between the fast-food giant and its restaurant operators in the US.  

‘We recognize this subsidy has been in place for many years. However, it is no longer fueling growth in the way it once was,’ an internal message from US leadership viewed by DailyMail.com said. 

McDonald’s Happy Meals may see a price hike in the new year as the company announced it will end its decades-long subsidy for the popular children’s meal on January 1, 2021

The money from the subsidy will instead be used for other investments including benefits for restaurant crew.

McDonald’s executives said in a meeting Monday that owners were free to raise the prices.

‘The family business is absolutely a priority. We just believe the dollars are better invested elsewhere,’ Charlie Strong, the chief field officer for McDonald’s USA said.

There have been simmering tensions between franchisees and corporate McDonald’s over additional fees charged for technology including software in its drive-thu operating systems.

McDonald’s, as well as other competitors, have been looking to increase technology investments to boost sales. 

However, franchisees are skeptical of the fees McDonald’s is charging for the technology. 

In total the technology investments cost around $10,000 a restaurant this year, as per company data.

The golden arches chain said it will bill restaurants $423 a month for 12 months starting in March for $70million in uncollected technology fees dating back to 2017.

But restaurant operators say that the company hasn’t explained why the fees need to be charged now.

The children’s Happy Meals sell for an average of $3.76 nationally. Franchisees may now raise the price by 20 cents or more

The children’s Happy Meals sell for an average of $3.76 nationally. Franchisees may now raise the price by 20 cents or more 

‘I think there is an opportunity for better communication,’ McDonald’s USA president Joe Erlinger said in the Monday call.

McDonald’s said the fees are being added as franchisees report record cash flow and strong sales from company-funded initiatives including $100million spent on marketing during the pandemic.

Though dining-in sales slumped in the pandemic with restaurant closures, the company saw a boom in drive-thru and digital sales.   

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