cdonald's was developing a promotion for the Big Mac based on its perception of the success of other stores in reducing prices.
The plan was to sell Big Macs and McMuffins for 55 cents apiece. This was known as Campaign 55. It allowed customers to buy a featured sandwich, like the Big Mac in April, for 55 cents when purchased with french fries and a drink. This was in keeping with the long-standing Value-Meals promotion in which a sandwich, fries, and a drink were bundled together at a lower price, with the additional capability that a customer could "SuperSize" the meal by asking for a larger order of fries and a larger drink. This promotion placed the emphasis not on the entire package but on the Big Mac, which would have its price lowered under certain circumstances. The promotion did not last very long. It was bitterly opposed by many franchisees because it was costly--they were forced to sell one of their leading sandwiches for less than their cost to make it, and they were not making up the difference on the fries or the drink. In addition, the promotion was not accomplishing its primary objective--it was not attracting customers. This came after earlier attempts to promote growth by the introduction of new menu items and by changing old menu items and by introducing other, less comprehensive pricing changes as well.
The fast food industry in the United States is already overbuilt in some areas. The main recent casualty has the restaurant division of PepsiCo, comprising the Pizza Hut, Taco Bell, and Kentucky Fried Chicken (KFC) chains with a total of almost 20,000 outlets in the United States and worldwide sales of $10.5 billion in 1994. The operating profit for the division fell 6 percent that year, its first fall in 15 years, thanks mainly to a dismal performance at Pizza Hut. The new boss of the division, Roger Enrico, was pushing through new products, such as cheese stuffed crust pizza at Pizza Hut and ch...