McDonald’s has decided to extend its popular $5 meal deal through August, a promotion initially set to end in July. This decision follows a strong vote from franchisees, with 93% in favor of the extension. The deal includes a choice of a McDouble burger or McChicken sandwich, four-piece Chicken McNuggets, small fries, and a small soft drink.

The promotion has successfully driven foot traffic back to McDonald’s. In late June, foot traffic was down by 0.8% year-over-year. However, it increased by 2.8% in the first week of July and by 2.4% in the second week, according to Placer.ai. McDonald’s US Chief Marketing Officer Tariq Hassan noted that the deal has helped the brand recover from recent price hikes by drawing in lower-income consumers and encouraging them to try pricier menu items.

Despite the apparent success, some franchisees are concerned about the long-term effects of the promotion. BTIG analyst Peter Saleh pointed out that around 20% to 25% of transactions now include the $5 meal deal, which is significantly higher than the typical 10%-15% for discounted deals. This suggests that many customers who would have visited McDonald’s anyway are opting for the discounted meal, potentially reducing overall profitability for franchisees.

Additionally, about 20% of customers are using an additional 20% off digital coupon from the McDonald’s app, further squeezing margins. Franchisees have reported that the high usage of the deal, combined with these coupons, is impacting their profitability. Some franchisees have even reduced marketing efforts for the deal and raised the spending threshold for the additional discount from $5 to $10 or more to mitigate losses.

As McDonald’s navigates this promotion, it could set a precedent for value offerings across the fast-food industry. With competitors like Chipotle and Sweetgreen providing alternatives, McDonald’s strategy and its impact on franchisees will be closely watched.

As of today, McDonald’s stock price is $258.36