Inflation is coming for McDonald's dollar drinks.
Some McDonald's Corp. locations are axing the chain's U.S. deal offering soda and other cold beverages of any size for a buck as restaurant owners try to manage a record spate of inflation.
Owners in a number of the chain's markets recently have voted to ditch the drink deals despite the company's recommendations to keep them, some franchisees said.
McDonald's owners from restaurants ranging from Chicago to Tennessee have boosted the prices for drinks by several dimes or are set to shortly.
Out of McDonald's 56 U.S. markets, 16 restaurant coops voted to advertise the company's value menu rather than dollar drinks, allowing them to move away from them, according to people familiar with the discussions.
McDonald's said customers can count on the chain for great value, and that good deals remain an important part of its marketing strategy.
"Franchisees set prices and have the flexibility to create promotions that will drive demand locally," the company said.
McDonald's for years has offered soda and other cold beverages of any size for a buck as part of their U.S. value menu.
The promotion withstood the 2008 financial crisis and lasted through much of the Covid-19 pandemic. Actress Mindy Kaling has advertised it, and company executives have championed it to investors.
For longtime fans of dollar drinks, the promotion's demise reflects the overall state of the economy, conjuring up a mix of sorrow and disbelief.
"I would hope this is something temporary and it would go back to how it was soon," said Damien Munoz, a 23-year-old retail worker in Naperville, Illinois.
Mr. Munoz said he began noticing last Tuesday that a small soda at a local McDonald's in Chicago was still a dollar, but a medium cost $1.39, and large $1.69.
He said he started checking other area McDonald's and found their prices, too, were changing.
Dollar drinks still exist at many McDonald's restaurants, including as a limited-time promotion on the chain's app in some markets that don't have them all the time now.
Fast-food chains have long leaned on value menus to help bring customers to their stores, particularly during economic downturns or periods of heightened competition.
Some companies have struggled to maintain the promotions as costs have risen for operators this year.
Chains have reduced their menu of discounted items or shrunk portions to try to improve their margins without angering customers.
McDonald's started its dollar menu in 2002, with former President Donald Trump, then a businessman and developer, appearing in ads at the time promoting a McChicken sandwich for a buck.
Around 2008, the company started promoting $1 cold drinks during the summer months in some locations, with chain executives saying they helped keep customers coming to its restaurants as the economy struggled.
McDonald's around 2010 convinced franchisees to offer the promotion for all sizes of beverages -- and for a longer period. Even Coca-Cola Co., McDonald's sole soda supplier, got involved in lobbying owners at the time.
In 2017, as McDonald's was fighting to improve its sales, the company started promoting cold beverages of all sizes for a dollar year round.
"They can understand and expect that we're going to have a consistent value message now," former chief executive Steve Easterbrook said, referring to offering customers $1 beverages, during a quarterly conference call in 2017.
The company and its franchisees put money behind national and local ads for dollar drinks, and many U.S. customers came to see them as a Golden Arches staple.
Late last year, as inflation concerns began to grow in the U.S., McDonald's informed U.S. franchisees that their costs for food and ingredients were likely to go up sharply next year.
The company told owners in March that their food and paper costs for the year were projected to increase by 10% to 12% on an annual basis, or $106,000 to $124,000 per restaurant, according to a company message viewed by The Wall Street Journal.
Labor costs are also going up for franchisees in the U.S., the company has said.
McDonald's agreed in January to allow restaurant locations to suspend the dollar drink promotion, but asked owners to keep directing their advertising dollars toward promoting the deal through September 2022, according to some franchisees.
Some McDonald's operators in high-cost markets suspended the promotion immediately, while other owners chose to keep it, given they would still be spending on advertising.
In May, as costs crept higher, franchisees decided to allow local markets to advertise the chain's value menu instead of dollar drinks if they chose to do so, freeing them up to drop the deal.
The company recommended owners keep them based on consumer data, but several McDonald's local owner units recently voted to no longer commit to selling any sized drinks for a dollar now, several franchisees said.
McDonald's operators are making drinks more expensive in some areas now, with one franchisee saying the shift has significantly improved restaurant profits.
Jo Carr, a McDonald's customer since she was a child, said she started noticing Sweet Tea in her local restaurants in southern Mississippi costing $1.59 recently.
Ms. Carr said she's increasingly sought out lunch specials and value menus in response to inflation and was a bit frustrated to find her preferred McDonald's beverage wasn't immune.
Tyler McCall had enjoyed getting a large $1 Diet Coke during a standing weekly lunch date with a friend in Chicago.
Last Wednesday, he said, he noticed a medium soda was going for $1.29 and a large for $1.49.
Mr. McCall, a 34-year-old content creator who said he grew up going to McDonald's with his grandmother, has come up with a drinks strategy: he plans to get a small Coke, still available for a buck, and top it off as needed.
He said: "I'll just make a few trips back to the soda fountain for refills."
