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McDonald's Drops Prices, Tries Luring Customers In

The Consumerist reports that your McDonald’s bill is about to get a bit cheaper, that is if you’re just purchasing beverages: The Golden Arches will reduce the cost of soda and coffee items starting in April. 

Bloomberg reports that McDonald’s will offer $1 sodas in any size and $2 McCafe speciality drinks in an attempt to lure in customers and boost its sluggish bottom line.

The limited-time promotion is just the latest attempt by the fast food giant to bring back customers who are either going elsewhere to eat or dining at home thanks to lower supermarket prices. Last year, McD’s revamped its McPick menu nearly a half-dozen times.

The discounted drinks are coming in advance of what is expected to be decreased revenue for McDonald’s. While the company increased revenue 2.4% last year, Bloomberg reports that estimates show those gains will decrease to 1.5% this year.

Analysts tell Bloomberg that demand for fast food has been weak recently, resulting in many company churning out promotions to keep people coming in.

Vice President of U.S. Marketing for McDonald’s, Adam Salgado, tells Bloomberg that the promotion is “adding another layer of great vale for customers with more choices.”

“We know that there are budget-conscious consumers out there,” he said. “Value will always be a part of our strategy.”

Still, the drink savings are likely to be fairly modest for most customers. While prices vary by location, Bloomberg notes that McCafe drinks in Chicago range from $2.69 to $3.09, giving customers a savings of between $1.69 and $2.09.

Meanwhile, soda purchases will provide even smaller savings for customers, as Business Insider notes that a large drink in Richmond, VA, costs about $1.29.

Analysts tell Bloomberg that choosing to discount beverages makes the most sense for fast food restaurants as they tend to be the highest-margin products on the menu at about 90% gross margins.

“They can probably afford to do it,” Peter Saleh, an analyst at BTIG LLC, tells Bloomberg of the beverage discounts.

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