In what may trigger The Great Burger War of 1979, the McDonald's Corp., the nation's biggest fast food chain, announced yesterday it is cutting its hamburger and cheesburger prices by a nickel starting Tuesday -- its first price reduction in 23 years.
No sooner had word slipped out of Ronald McDonald's mouth than other fast food chains indicated they may soon follow suit.
"We'll certainly be watching" for the results of the McDonald's move, said Thomas Burke, senior vice president of the Mariott Corp., which owns the Roy Rogers roast beef and hamburger chain.
"I think this is just a gimmick by McDonald's to attract customers they've been losing for a long time," said Adolph Chandler, manager of the Burger King on Baltimore Avenue in Beltsville. In any event, he said, the district manager for the Burger King franchise, of which his store is a part, already has been at work on a plan to lower its burger prices.
McDonald's officials say they can lower the prices because of a slight decrease in the cost of their commodities, particularly beef. "It gives us the possibility to pass on some savings to our customers . . . to give our customers a break in the inflation cycle," said McDonald's spokesman Doug Timberlake in Chicago.
Company officials guaranteed that there will be just as many pickles and onions on McDonald's burgers as ever and that the quantity and the quality of the meat will stay the same -- "100 percent domestic beef, no additives, no fillers."
But that didn't stop some of McDonald's leading competitors, who promptly began sniping at the move.
"You put in there that we still think we make a better burger," Tony Richardson, manager of the Gino's on Greenbelt Road in College Park, told a reporter.
McDonald's, like other fast food chains, had been suffering a decline in customers recently. But a recent issue of the industry magazine Restaurant News reports that customers are starting to return to fast food restaurants after a six-month period during which patronage slacked off.
The 5-cent reduction will go into effect in the 1,225 restarurants owned and operated nationwide by the McDonald's Corp. This means the price of hamburgers will go from 43 to 38 cents and the price of cheeseburgers from 48 to 43 cents.
Timberlake said that at most of McDonald's 3,460 franchise outlets, owners have agreed to reduce prices by 10 percent for hamburgers and cheeseburgers, still the chain's biggest selling items.
Prices vary at the franchises, he said, and some may end up offering slightly more or less than a 5-cent reduction. The reduction will not affect prices of any other food items sold by the chain.
"We'd like to be able to offer an across-the-board reduction," but the company could not absorb that big of a revenue loss, Timberlake said.
Reduced prices will be offered at all 112 McDonald's outlets in the metropolitan area, according to Kathy Szymanski, McDonald's local spokeswoman.
It is not certain how long the prices will stay at the lower level, Timberlake said.
"Any price change, up or down, will depend on future market conditions," he said.
He said McDonald's sales and earnings have been increasing by about 20 percent each quarter from the same period the previous year. Yet, in recent months, there have been indications that McDonald's phenomenal success may finally be leveling off.
For example, while McDonald's is still one of America's fastest growing companies -- with $4.6 billion in annual sales -- its pretax profit margins have fallen consistently in the past two years.
McDonald's has served over 35 billion hamburgers since it first began selling them for 15 cents in 1956, Timberlake said.
In a recent interview, McDonald's chief exectuive Fred Turner said the golden-arched stores were beginning to feel the squeeze as more and more of their customers began "watching their dollars."
In addition, the fast food industry generally has suffered this summer from the aftereffects of the gasoline shortage, which has kept many familes eating at home, said Mariott's Burke.
The mercurial nture of the cost of beef may force McDonald's to raise their hamburger prices again soon, many of the hamburger retailers said. According to Restaurant News, beef prices have merely stopped spiraling just long enough to stabilize at a high level. Suppliers expect prices to resume their upward trend at the end of the year, the journal reports.
Some local McDonald's customers reacted to the news of the price cut with the observation that every little bit of reduction helps in these times of inflation. But some said they'd like to see the prices of McDonald's other sandwiches reduced as well.
"I think the Big Macs should be 50 cents," said Jerry Penn, as he sat sipping a soda in the McDonald's at 14th and K Streets NW. Big Macs are selling there for $1 apiece.
"Does this mean they're going to put more [additives] in the burgers?" Eric Williams, a Navy corpsman assigned to Quantico, asked jokingly. "If they can do it without lowering the quality of the food, and mind you . . . well then, it's a help," he added as he drank his cola.
"I think McDonald's customers will come in here no matter what the prices are," said Donald McCue, who just moved to Washington from Las Vegas.
McCue said he stopped at McDonald's last night because he had only two dollars in his pocket and was hungry. For him, "this is still the cheapest place in town."