# McDonald's is the new value meal

> Trader Mike Khouw says McDonald's stock is cheap even as the chain struggles with its value perception.
- Title: McDonald's is the new value meal · CNBC | Shortify
- Summary: Trader Mike Khouw says McDonald's stock is cheap even as the chain struggles with its value perception. McDonald's shares have improved fundamentally over…
- Keywords: mcdonald's, value perception, fast food inflation, stock valuation, options trading, consumer spending, low-income households, share buybacks, earnings multiple, trading strategy, business, finance
- Source: CNBC — https://cnbc.com/2026/09/18/mcdonalds-is-the-new-value-meal-says-trader-mike-khouw.html
- Author: Michael Khouw
- Published: 2026-09-18T18:11:47+00:00
- Read time: 2 min
- Topics: mcdonald's, value perception, fast food inflation, stock valuation, options trading, consumer spending, low-income households, share buybacks, earnings multiple, trading strategy, business, finance
## Value menu perception crumbles
McDonald's slowest sales growth in over a year prompted a strategy shift. The percentage of U.S. consumers viewing McDonald's as good value dropped from 55% in 2020 to 40% in 2024, according to UBS research.

> A nickel ain't worth a dime anymore
## Low-income shoppers pulling back
Comparable sales rose only 0.8% in Q2 while spending by households earning under $40,000 declined 2.4%, according to transaction firm Numerator. Stories of overpriced value meals at locations like one on I-95 in Connecticut have gone viral.
## Dollar menu won't return
McDonald's is preparing a bridge plan with temporary menu items, digital promotions, and loyalty offers instead. A true return to dollar menu pricing is nearly impossible given food and labor inflation over the past 20 years.
## Stock price flat, business booming
McDonald's shares are essentially unchanged at $248.50 over five years versus $242.50 five years ago. Yet revenue grew from $23.2 billion to $28.2 billion, net income rose from $7.5 billion to $9.15 billion, and share count fell 5.25%.
## Valuation at 10-year low
McDonald's trades at 19.2 times forward earnings, the cheapest in ten years, down from 25 times five years ago. Free cash flow is expected to approach $7.65 billion, giving investors strong cash generation at a discount.
## Higher earners still visit
McDonald's isn't dependent only on low-income consumers. Higher-income diners also eat there, and many middle-income customers are trading down from upscale restaurants like Mastro's and Ruth's Chris, where McDonald's scale and digital ecosystem provide advantages.
## Options trade structure
With implied volatility at 23.5%, a spread strategy makes sense. Sell a three-month $230 or $235 put and buy a $250-$275 call spread to establish the position near even, betting the stock recovers toward $275 as value initiatives gain traction.
## Premium reduction through spreads
Buying a $250 call outright costs $13.50. By selling a $270 call and $230 put simultaneously, the net premium drops to just $2.12, creating a value menu for options traders while accepting the obligation to buy shares below current price.
## Key takeaway

McDonald's shares have improved fundamentally over five years while staying flat in price, making the stock itself a bargain despite customer concerns about menu pricing.