“It is only when we take chances that our lives improve.”
— Walter Anderson
Value Wars Fast-Food Price Cuts Spark Long-Running Battle
The fast-food value wars are heating up as more leading chains join the fray and others extend their price cuts.
From deals to innovative use of apps and subscriptions, fast-food giants are pulling out all the stops. McDonald’s has extended its $5 Meal Deal through the end of the year, and Burger King extended its $5 Your Way Meal for several weeks into the fall. Carl’s Jr. and White Castle dove into the fray in August with ongoing price cuts. And Sonic Drive-In’s FUN.99 menu and Jack in the Box’s $4 Munchies meals are permanent price changes. The price cuts appear to be drawing more customers, lifting fast- food traffic by a modest 2%–5% above year-earlier levels since the value wars began, according to Placer.ai. The marketing wars may yield other lasting changes. Fast-food chains are using apps in innovative ways. Taco Bell recently introduced a “name your price tool” within its mobile app, asking customers to set a spending limit and offering them various menu combinations within that range. Chosen items can be pinned and re-mixed with other options to generate the budget order of the customer’s choice. Nearly half (46%) of 2,000 adults surveyed by Lending Tree said using apps entices them to visit fast-food restaurants more often. Fast-food chains also are testing subscription plans that have been so successful in other industries. Taco Bell turned heads in 2022 by offering loyalty members who buy a $10-a-month
subscription access to a special section in their app enabling them to order a free taco or nacho fries every day. In a test run, the chain said the offering yielded a 20% increase in rewards memberships. Subway also has made subscriptions available intermittently, offering a 50% discount to loyalty members who purchase a $15-a-month subscription. The industry faces fundamental problems, however. Nearly 80% of consumers have come to view fast food as a luxury, and two-thirds of them are cutting back, the Lending Tree survey shows. For franchisees, making value pricing work on an ongoing basis is a challenge. According to research at Georgia State University, the best strategy is to bundle popular menu items with low- cost offerings, such as sodas, and to train employees to upsell customers on desserts or other higher-margin items.
Visit our blog for helpful franchise law insights and industry trends: westcoastfanchiselaw.com/insights
3
Made with FlippingBook Ebook Creator