The $3 items will include the Sausage McMuffin with Egg, the Triple Cheeseburger and the Happy Meal. Called the $1-$2-$3 Dollar Menu, it includes a wider variety of items covering the three different price points.
McDonald's dropped its popular "Dollar Menu" in 2013 after franchisees groused that selling items like a double cheeseburger for $1 cut into profits.
A former restaurant operator of McDonald's, Dick Adams, says that despite the value menus are losing a balance in general for franchises, those have seen their revenues and also their voice in the time of company diminish in late years. However, he notes that fast food companies are now stuck in a "value trap." "This is a competitive market".
McDonald's says it made its move to recapture value-oriented diners.
McDonald's USA president Chris Kempczinski reportedly said, "We have lost a number of our customers over the last few years because we didn't have a compelling value proposition".
The Oak Brook, Ill. -based company missed out on 500 million transactions in the last four years as a result, he added.
Taco Bell, meanwhile, is seeking to remain in the mix as McDonald's and its burger rivals at Wendy's and Burger King increasingly look for ways to appeal to the core fast-food customers looking for discounted fare. "They need to be in the value game to drive traffic", said Peter Saleh, managing director at financial-services firm BTIG.
MCDONALD'S Corp said on Monday it would introduce new menus with $1, $2 and $3 items in early January as restaurants battle to win U.S. customers who have come to expect deals on fast food.
If items are priced too high, customers feel like they're getting ripped off and head to competitors.
At the same time, McDonald's is increasing its upscale offerings. The company in May unveiled the Signature Crafted Recipes line of sandwiches, which cost $4.99 to $5.19.
Andy Barish, an industry analyst at Jefferies, upgraded the stock to "buy" on Tuesday and raised his price target to $200, in part because the new value menu will help the chain continue to gain customers. "They can get you in with value items and then trade the consumer up to midtier or the more premium items", he said.
McDonald's announced in October that it was planning the menu, though it didn't give details until Monday.