For the past several decades, McDonald’s has made a monthly payment to its franchisees, as a way to help subsidize the cost of whatever toys have been placed inside each Happy Meal. The “Happy Meal Rent and Service Fee” was around $300 per month, which kept franchisees from paying around $3,600 in annual toy costs. As of January 1, McDonald’s will stop making these monthly payments—which means that Happy Meals could be a little more expensive next year. “We recognize this subsidy has been in place for many years,” McDonald’s wrote in an internal memo earlier this week. “However it is no longer fueling growth in the way it once was.”
The average cost of a Happy Meal at a U.S. McDonald’s restaurant is currently $3.76. McDonald’s execs reportedly told franchisees that they could raise those prices, and the franchisees may bump the cost of a Happy Meal by 20 cents, in order to compensate for losing the monthly subsidy. Perhaps unsurprisingly, franchisees aren’t exactly in favor of this decision. The National Owners Association said that it “did not support, nor did we endorse” the cancellation of the Happy Meal subsidy, specifically. “We believe the Happy Meal rebates represent a token of partnership and acknowledgment by the company that each owner [and] operator invests to drive affordable family business to our restaurants,” the organization said.