McDonald's has unleashed its latest weapon in the fast-food wars -- and that should terrify Burger King and Wendy's

McDonald's Ditches Dollar Menu for McPick 2 Menu
McDonald's Ditches Dollar Menu for McPick 2 Menu

McDonald's is getting cheaper, and that's bad news for Wendy's and Burger King.

As part of its turnaround plan, the fast-food chain is realigning around what it calls a "value platform," which essentially means the company is planning to offer more promotions.

McDonald's is kicking off this effort with the "McPick 2," a limited-time deal that will let customers select two of the following items for $2: a McDouble, a McChicken, small fries, and mozzarella sticks.

The promotion, which starts January 4, returns sandwiches to the $1 price point of the Dollar Menu.

McDonald's reformulated the Dollar Menu two years ago by axing the $1 price ceiling and turning it into the "Dollar Menu and More" with items that cost up to $5.

The shift upset some customers.

"Some of the challenges we've had in the US have been somewhat self-inflicted," McDonald's CEO Steve Easterbrook said during a conference call in July. "We moved away from the Dollar Menu and didn't replace it with significant-enough value in the eyes of consumers."

Around the same time, Burger King and Wendy's started offering more promotions, and both chains saw a corresponding uptick in sales.

Now McDonald's is back in the game in a big way, and Burger King and Wendy's will be pressured to offer more deals to compete.

Burger King is fighting back with a 10-nugget deal for $1.49. It's also offering coupons for other items through its mobile app.

Wendy's, meanwhile, is offering a "4 for $4" meal that includes a junior bacon cheeseburger, four chicken nuggets, small fries, and a drink -- all priced at $4.

Related -- Secret menu items at fast-food restaurants:

The rush of promotions indicates that despite lower gas prices and signs of an improving economy, customers are still demanding deep discounts from fast-food chains.

McDonald's says about one quarter of its customers are motivated by value meals.

The promotions are meant to increase traffic among those customers. But steep discounts can also end up hurting profits.

At the end of the day, the winner of the battle between the three biggest fast-food burger chains will be the customers.

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