McDonald's (MCD  ) has recently decided to increase its competitive edge in the fast-food price wars. As the world's largest restaurant chain, McDonald's faces stiff competition in America from Wendy's (WEN  ) and Burger King (BKW  ). As a result, it will begin to offer a new value-priced menu nationwide in 2018, featuring items for $1, $2 and $3 (no word yet on whether an international discount menu might be offered).

Commentators believe this to be the biggest recent news from McDonald's in a long time, and expect it to reap gains more impressive than its all-day breakfast innovation, which helped McDonald's pull off its recent turnaround.

The predecessor of the value-priced menu is the budget menu, which was retired in 2014. The Dollar Menu was a success with customers, but was less profitable for franchise operators, given the extremely low prices that dragged down profit margins. The Dollar Menu in most franchises offered the McDouble cheeseburger, 4 Chicken McNuggets, and large sweet teas, each item selling for $1 each. In the middle, McDonalds has also experimented with the McPick 2 for $5, as well as $1 drinks, in an attempt at striking an intermediary by offering a discount option that was more profitable for franchises.

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This new value-priced menu will replace the Dollar Menu, and aims to increase the profit margin. Almost all franchisees have agreed to participate in this new program, but the difficulty is finding the correct combination of discounts to give. McDonald's strategy must take into account the post-recession thriftiness of its customers' attitudes. Yet it also stands to benefit from a recent uptick in U.S. restaurant traffic after many years of decline. Commentators view McDonald's new value-priced menus as an attempt to preserve the recent gains: indeed, customer traffic is better than it was this time last year.

In further news, McDonald's has also launched McCafe coffee shop locations, equipped with $12,000 espresso machines. It has also started a mobile ordering system, to increase its competitiveness against Domino's (DPZ  ) and Starbucks (SBUX  ).