ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Saturday, April 26, 1997 TAG: 9704280032
SECTION: BUSINESS PAGE: A-9 EDITION: METRO
DATELINE: CHICAGO
SOURCE: ASSOCIATED PRESS
Some restaurant owners worry people will switch from other large meals to the discounted one.
Some McDonald's franchisees have quietly boosted prices of the fries and drinks that must be bought to get Big Macs for 75 percent off, diluting the savings customers will see under the fast-food chain's newest promotion.
In its Campaign 55 promotion, McDonald's Corp. has offered significantly discounted breakfast sandwiches with the purchase of hash browns and coffee of any size. Today, the Oak Brook, Ill.-based chain extended the promotion to its larger sandwiches, beginning with the Big Mac.
But franchisees, many of whom were initially reluctant to take part in the yearlong promotion, have in some cases raised prices on hash browns, french fries and drinks that must be purchased to get the 55-cent sandwiches, said Dick Adams, who represents a group of disenchanted McDonald's franchisees.
``I've talked to people who said they've raised prices, but it's not anything dramatic,'' Adams said Friday.
Some franchisees have expressed concern about the profits they will lose on the large sandwiches, which cost more than 40 cents to make.
McDonald's executives say franchisees will make up for the loss in profits by additional customer traffic. But some restaurant owners are concerned people merely will switch from other large sandwiches to the discounted one and buy small drinks and fries, which are less profitable than larger combinations offered under the Value Meal program.
``There's a great deal of concern in this entire promotion about what the customers will buy,'' said Adams, a frequent critic of the fast-food chain's management. ``If they buy a large drink and large fries, franchisees will be OK, but if they buy a small drink and small fries, they lose money.''
A McDonald's spokeswoman did not immediately return a call seeking comment. But Ed Rensi, president of McDonald's domestic division, recently sent a letter to franchisees urging them not to raise prices.
``Our customers know when we're offering real value ... and they know when we're being greedy,'' Rensi said in the memo, obtained Friday by The Associated Press.
Rensi also attached a memo by company founder Ray Kroc that also warned against raising prices. Kroc called McDonald's a company of ``value and volume.''
But Adams suggested customers already believe they're not getting value in the promotion because they must purchase add-ons to get the discounted sandwiches.
``We're getting a lot of people coming in who aren't hearing the part of the ad that says they have to buy additional items, and they complain they are being misled,'' Adams said. ``That's probably more of a concern than prices going up a few pennies on fries and drinks.''
A survey of 55 McDonald's restaurants in every state found that 14 had raised prices for large fries and medium Cokes by an average of a little more than 6 cents, according to The Wall Street Journal, which first reported on the price increase. The increase came in the last six weeks, the newspaper reported Friday.
LENGTH: Medium: 65 linesby CNB