020911 McDonald's Franchisees Mulling Discount Menu

Chicago, IL - In the latest effort to revive U.S. sales, McDonald's U.S. franchisees are considering a national discount menu and an extensive remodeling of older stores.

McDonald's Corp. executives are asking franchisees to consider launching a menu in which 10 items would sell for under dlrs 1, according to people familiar with the matter.

Currently, parts of the U.S. market already offer such a program. Wendy's International Inc. also offers a 99-cent menu, which Wall Street analysts have credited with helping to build sales.

The fast-food giant's franchisees are also considering a proposal by executives to remodel every store over 15 years old.

McDonald's executives are asking that these older stores be either rebuilt or relocated. It's unclear how much financial support franchisees would get from the company.

McDonald's U.S. sales have been in a slump over the past two years, tallying flat to negative sales at stores open for more than a year. The Oak Brook, Ill., company has tried everything from improving kitchen operations to expanding its menu to launching a massive mystery-shopping program to improve service. Meanwhile, Wendy's, the nation's No. 3 burger chain, is gaining momentum with brisk sales of a new salad line, and Burger King, the nation's No. 2 burger chain, is waking up with a new management team and owner.

McDonald's executives are looking at decor given the gains in France, where 50% of the stores have been extensively remodeled or upgraded. Same-store sales gains at these upgraded stores have ranged from 3% to 20%.

Some U.S. franchisees laud an upgrading of restaurants while others are less confident it will be the solution to McDonald's problems. Franchisees are meeting with McDonald's executives this week in Las Vegas in what seems a desperate, last-ditch attempt to turn around U.S. sales, which make up half of global sales. The meeting continues Thursday, and franchisees still need to vote on any initiatives.

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