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The $3 Meal

One Package, No Options

Great Financial Results

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Aside from its performance as the largest fast-food company in America, McDonald's (NYSE MCD) has a genius for marketing and managing its menu.

Among its packing options is its under-$3 menu, aimed, at least in part, at people who could not normally afford to eat out. It captures this group in a way that few other fast food companies are able to

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For $3, patrons can get a McChicken or McDouble along with a Full French Fries and a Medium Coca-Cola. Patrons who pay $3 can get a breakfast of Sausage Biscuit, Hash Browns, and a Medium McCoffee.

McDonald’s has a similar package for $4.

At the far end of the spectrum, one person could pay $15 for McDonald’s high-end sandwiches, milkshakes, and fries.

The genius is not just in the pricing. It is in the package.

Among the best marketing moves a company can make, no matter what business it is in, is an “all-in” package, which the $3 and $4 meals are. It is like some car companies. Subaru often offers cars at one price, with very little extra beyond what the customer gets as he walks through the showroom door. Most manufacturers offer cars with a long list of features that cost extra. The buyer who wants to drive off the lot with one price calculation does not have to sift through what he or she might want, from heated seats to a bigger engine. (The long list of options is the Starbucks (NASDAQ: SBUX) approach compared to McDonald's.)

Simplicity is underrated.

McDonald's has demonstrated that its approach to the fast food industry has worked. Last year, revenue rose 4% to $26.9 billion. EPS rose 5% to $11.95. Its yield is 2.65%

Genius produces results.

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