Summer Showdown: Fast-Food Chains Head to War over Value
Burger Wars 2.0: Fast Food Chains Fight for Your Five Bucks with Value Menus
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In a competitive move to appeal to cost-conscious consumers, fast-food giants such as McDonald’s, Sonic, Taco Bell, and others are doubling down on value-oriented strategies this summer. These efforts come as the industry grapples with economic pressures such as price hikes related to higher labor and commodity costs.
The Real Deal
There are several reasons why fast-food restaurants are competing on price with value meals and deals. First and foremost, inflation is pinching customer wallets. The cost of everything, including groceries, is going up. This means people have less money to spend eating out. Fast food chains are hoping that budget-conscious customers looking for the best deals will be lured in by their value offerings.
Fast food prices have also been rising. Ironically, fast food itself hasn't been immune to inflation. Chains have raised menu prices in recent years, which has driven some customers away. By emphasizing value, they're trying to win back those customers who might be considering skipping the drive-thru or ordering less.
What it boils down to is a battle for a shrinking pool of customers. Fast food restaurants are hoping that value will be the key to unlocking their wallets.
The Value Wars Heat Up
McDonald’s has launched a nationwide $5 Meal Deal, available for a limited time, featuring a combination of a McDouble or McChicken sandwich, small fries, four-piece Chicken McNuggets, and a small drink. This initiative aims to provide substantial value amid reports of increased prices, positioning McDonald’s as a go-to destination for affordable dining options. The chain has also introduced "Free Fries Friday" promotions for mobile orders (get free medium fries on any $1+ purchase, only in the app ) and localized value deals across various regions, such as buy-one-get-one offers and discounted combos tailored by local operators.
McDonald’s isn’t alone in its value push. Sonic has unveiled its $1.99 Menu, branded as “FUN.99,” which includes items such as the Queso Wrap, Quarter Pound Double Cheeseburger, Chili Cheese Coney, and small servings of tots or shakes. This menu underscores SONIC’s commitment to offering a diverse range of affordable choices, appealing to a broad range of customer preferences. Sonic is flexing its wide selection to give itself a leg up on other value menus.
Taco Bell has joined the fray with its $7 Luxe Box, featuring an assortment including a Chalupa Supreme, Beefy Five-Layer Burrito, Double Stacked Taco, chips with nacho cheese sauce, and a medium drink. This is a beefy value offering, to say the least. Taco Bell’s strategy is to attract diners seeking substantial and affordable meal options.
KFC and Burger King have also introduced their own value bundles, such as KFC’s $4.99 meal with chicken, mashed potatoes, gravy, and a biscuit, and Burger King’s $5 Your Way Meal offering various sandwich options with sides and a drink.
Stimulating Sales
Some industry experts say when everyone competes on value, all players lose. Others suggest that while these aggressive pricing strategies may temporarily squeeze profit margins, they are crucial for stimulating sales and maintaining relevance in a challenging economic environment. The success of these value-focused promotions will hinge on their ability to attract repeat customers and improve sales volume.
Moreover, effective marketing and strategic communication will be critical in sustaining consumer interest beyond the initial promotional periods. As the summer unfolds, the fast-food landscape is set to be defined by these value-driven strategies, with consumers poised to benefit from a range of affordable dining options while brands vie for their attention and loyalty through enticing promotions and menu innovations. Only time will tell if customers cool off in the fall when prices return to normal.
In the Classroom
This article can be used to discuss price strategy and promotion strategy (Chapter 12: Dimensions of Marketing Strategy).
Discussion Questions
- How are fast-food chains like McDonald’s and Taco Bell using value menus to attract customers? Compare and contrast their approaches.
- What economic factors are driving restaurants to emphasize value promotions right now?
- Discuss the potential benefits and challenges of competing on value for fast-food chains.
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.
Julie Littman, "McDonald’s to launch $5 Meal Deal next week," Restaurant Dive, June 20, 2024, https://www.restaurantdive.com/news/mcdonalds-5-dollar-meal-deal-promotion-value-wars-june/719354/
"Sonic Crashes Fast-Food Value Wars with $1.99 Menu," QSR, July 1, 2024, https://www.qsrmagazine.com/news/sonic-crashes-fast-food-value-wars-with-1-99-menu/