McDonald's is presenting its price cuts as a readjustment due to recent declines in meat and energy costs, but there are other motives behind the moves.
McDonald's, which once strode the Israeli fast-food industry like a colossus now faces new realities, after a court-approved Burger King acquisition of the local Burger Ranch chain. The new owners apparently plan to turn its newly acquired restaurants into Burger King outlets, and that means McDonald's will be going head-to-head against one major player, with over 100 restaurants, rather than two smaller chains.
In addition, the recession pricing introduced by many "regular" restaurants makes McDonald's a less attractive option for many potential customers. Sushi Samba, for example, is offering a three-course meal starting at NIS 50, while the very tony Rafael has business lunches starting at NIS 50, instead of the pre-recession price of NIS 95.
As soon as the market becomes competitive, it pulls the rest of the market down. The fast-food chains cannot keep asking nearly NIS 50 for a meal, even one they describe as "premium deluxe," in a self-service establishment with plastic chairs and disposable everything.
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