McDonald's $5 meal deal to launch next week as fast-food chains woo frugal customers

(Reuters) - McDonald's will roll out its $5 meal deal from June 25 for a limited time at some restaurants across the U.S., the burger giant said on Thursday, as fast-food chains ramp up cost-friendly options to boost spending among lower-income groups.

Restaurant Brands International-owned rival, Burger King, is also considering a $5 "Your Way deal" as companies turn to improved offers and promotions to counter inflation-hit customers who are increasingly opting to eat at home.

McDonald's value deal will include a McDouble or McChicken sandwich, small fries, four-piece Chicken McNuggets, and a small soft drink for $5.

McDouble meal options may be priced at $6 at certain restaurants in Alaska, California, Guam, Hawaii, Nevada, New York (Manhattan only) and Washington.

McDonald's also brought back app-only "Free Fries Friday" that allows customers to snag a free medium fry with any $1 minimum purchase through the end of 2024.

Picky spending hurt performance at McDonald's and KFC parent Yum Brands in the latest reported quarter, whereas promotions fueled sales at Domino's Pizza.

Disposable income among the lower-income groups in the U.S. is declining while menu prices have risen across the food industry over the past year as companies tried to mitigate higher commodity and supply chain costs.

Late May, McDonald's USA President Joe Erlinger denounced in an open letter viral reports of runaway Big Mac prices as painting an inaccurate picture of the company.

Meanwhile, the pivot to eating at home has been accelerated by major retailers such as Target, Walmart and Kroger keeping prices on everyday essentials low.

(Reporting by Savyata Mishra in Bengaluru; Editing by Sriraj Kalluvila)