Big Mac Attack Proposed 55-Cent Burger Could Trigger Price War

Bellying up to the competition, McDonald’s Corp. is sizing up a 55-cent Big Mac.

The prospect of a Big Burger Battle that could cut into corporate profits drove down the stock of McDonald’s by 5 percent and undercut shares of competitors Wednesday. Wall Street got indigestion despite statements from Burger King and Wendy’s International that they don’t plan to enlist in a price war.

While the plans for cheaper sandwiches may help Main Street consumers stretch their budgets, the move also could stretch waistbands, with 29 grams of fat in each sandwich and about half the daily recommended amount of saturated fat.

“Sounds like they’re using their trump card, which is extremely low prices, to lure people into their restaurants,” said Michael Jacobson, executive director of a nutrition watchdog group, the Center for Science in the Public Interest. “But it’s disappointing that McDonald’s has given up on encouraging people to eat healthier.”

McDonald’s began quietly cutting prices of some products, including Chicken McNuggets, and offering two Big Macs for $2, earlier this year.

It will outline its “Campaign 55” plan to some of its 2,700 franchisees in a closed-circuit videocast today and will ask for a vote directly thereafter, said Dick Adams, a former company director of franchising for the western United States. He now represents hundreds of disenchanted franchisees across the nation.

McDonald’s has “been showing declining same-store sales in the U.S. for six quarters in a row and this is a move to reverse that trend,” Adams said. “It’s the only option being presented to franchisees, so it’ll probably pass.”

Mark Ray, franchise owner for 25 McDonald’s restaurants and express outlets in Spokane and North Idaho, was out of town and could not be reached for comment.

To stay competitive, Burger King, Wendy’s and others may be forced to follow with their own lower-priced offerings, said analyst Allan Hickok at Piper Jaffray in Minneapolis.

“If 55 cents ends up being the price point that sticks, then I can guarantee you the other fast-feeders will have an item at 55 cents,” Hickok said. “Otherwise, they will see a lot of their customers in competitors’ parking lots.”

Spokesmen for Wendy’s and Burger King said there currently are no plans for lower prices.

Campaign 55 refers to the year the company was founded. The 55-cent package will rotate from the Big Mac to Quarter Pounder to the McRib, all of which cost about $2, to the $2.19 Arch Deluxe hamburger, over the next 12 months, according to franchisees.

The sandwiches must be bought with fries and a drink, The Wall Street Journal reported Wednesday.