Burger King, Jack in the Box, McDonald’s, Sonic, Taco Bell and Wendy’s Woo Customers in Price War
In an appeal to inflation-weary consumers, quick-service restaurants have ramped up a variety of $7-or-less value meals. That’s the big headline in fast-food news right now, with prices starting at $1.99.
The value-deal battle comes in response to sagging consumer demand. Citing Black Box Intelligence, The Wall Street Journal reported that guest traffic throughout the industry, from fast-food drive-through lanes to sit-down venues, has declined 3.3% this year through June 16 compared to that period in 2023. The Journal article also said that nearly 30% of fast-food orders included some type of promotion during the first quarter of this year, according to market research specialist Circana, reflecting a 3% increase over 2023.
So who’s doing what to lure bargain hunters?
Under the Golden Arches
As the world’s largest restaurant chain, McDonald’s grabs attention with every move. Its $5 Meal Deal, introduced June 25, lets customers choose between a McDouble or McChicken sandwich, plus a four-piece McNuggets, French fries and drink, according to USA Today. The promotion was scheduled to last about a month, although Fox Business reported that McDonald’s U.S. President Joe Erlinger said restaurants in some cities – Dallas, Denver, Kansas City, Las Vegas and Phoenix among them – plan to keep it longer.
More than a third of frequent fast-food patrons said they’d go after the brand’s $5 meal deal, based on a May survey by Lisa W. Miller & Associates, and Erlinger recently told The Journal that sales grew steadily on day one of the promotion. He also remarked that McDonald’s and its franchisees “were comfortable with the meal’s profitability.”
This April, McDonald’s had made fast-food news – but not in a good way – when profits failed to meet projections because customers resisted price increases. The average Big Mac now costs $5.29, a 21% hike since 2019, and a 10-McNuggets meal now runs about $9.19, up 28% since 2019. McDonald’s CEO Chris Kempczinski stated in April that “consumers continue to be even more discriminating with every dollar that they spend … putting pressure on the QSR industry,” Fox Business said. A Lending Tree survey published May 20 supports that reasoning, finding that 80% of consumers view fast food as a luxury.
Burger King Got the Jump
Burger King threw down its gauntlet June 13 with the $5 Your Way Meal, NBC’s Today show reported. Burger King disclosed to Bloomberg that it wanted to launch its deal in mid-June to get ahead of McDonald’s. “Our priority at BK is to offer guests great value all year long — never just for a single month,” a Burger King spokesperson wrote, jabbing at McDonald’s, in an email to Today.
The special lets customers select one of three sandwiches – the Whopper Jr., a Bacon Cheeseburger or a Chicken Jr. – along with French fries, four chicken nuggets and a soft drink. “Eat like a king who’s on a budget: three tasty options, fries, drink and nuggets, all for five bucks. Wait, that can’t be right,” a TV commercial announces, following up with, “Just confirmed that that’s the real price.”
Taco Bell
Taco Bell waded into the value-deal battle with its Luxe Cravings Box, which debuted June 27. The combo meal includes the five-layer Chalupa Supreme beef burrito, a double taco, chips and nacho cheese sauce and a medium drink for $7. Taco Bell says that’s a 55% discount off typical menu prices for those items, according to San Diego’s ABC affiliate.
The TV station’s report quoted Taylor Montgomery, Taco Bell North America’s chief marketing officer, as saying, “With the launch of the $7 Luxe Cravings Box, we’re giving consumers our most craveable items at an affordable price point… We believe consumers shouldn’t have to choose between affordability and abundance.”
Wendy’s Breakfast and Biggie Bags
Wendy’s deal undercuts Taco Bell’s by more than half with a $3 breakfast that premiered May 20. It lets customers choose from a bacon-egg-cheese English muffin or a sausage-egg-cheese English muffin along with seasoned potatoes. Chief Financial Officer Gunther Plosch noted that the “consumer is still under pressure“ and observed that visits by lower-income households are down while traffic from higher earners is up — signs consumers are watching their pennies.
Through June 30, Wendy’s had competed with its $5 Biggie Bag. According to Fox Business, diners who used the Wendy’s app could score the bonus of a free small Frosty when they bought those $5 Biggie Bags (a Jr. Bacon Cheeseburger or Crispy Chicken Sandwich, which is accompanied by nuggets, Jr. Hot and Crispy Fries, and a small soft drink).
Sonic and Jack in the Box
If Wendy’s $3 breakfast sounds rock-bottom, well, Sonic Drive-In isn’t about to be outdone. On July 1, it made fast-food news with the unveiling of its Fun.99 Menu of items for $1.99. Customers can choose from the new Bacon Ranch Queso Wrap and Southwest Crunch Queso Wrap, a quarter-pound double cheeseburger, chili-cheese hot dog, small order of tater tots, and 16-ounce shakes.
Ryan Dickerson, Sonic’s chief marketing officer, commented to Fox Business that variety rules in his brand’s deal. “Many restaurant brands are touting value meals and discounts, and you see a lot of recycled ideas with limited options,” said Dickerson, pleased that Sonic customers don’t “have to settle for the same old, tired discounts or boring meals.”
Jack in the Box made fast-food news May 29 with the dawn of its all-day Munchies. Those items cost $4 or less: chicken nuggets, French toast sticks, Jr. Bacon Cheeseburger, Jr. Cheeseburger, Jr. Chicken Sandwich, Jr. Jumbo Jack, Tiny Tacos, sourdough grilled cheese, two tacos, value drink, value curly fries and value French fries.
Other Restaurants
Even some non-QSR restaurants are getting in on the meal-deal act, The Wall Street Journal said. For instance, Denny’s “diner deals” start at $5.99. “You have to meet them [customers] where they are,” Denny’s CEO Kelli Valade told the newspaper last week. Other casual brands such as Applebee’s, Chili’s and Buffalo Wild Wings also have offered specials recently.
Some competitors are standing firm, however, according to The Journal. For example, Darden Restaurants, which owns Olive Garden and LongHorn Steakhouse, forgoes specials and instead emphasizes that its existing prices represent strong value. “We’re not going to do things to buy sales even with the increasing discounting our competitors are doing,” CEO Rick Cardenas said during a recent earnings call.
Will the Value-Deal Battle Last?
Will the value-deal battle reel in customers for good? Mani Kulasooriya, co-founder and CEO of Cut+Dry, a food-service e-commerce ordering platform, expresses pessimism. “Fast-food wars will center on $5 deals, but as restaurants go head-to-head, it’ll take more to restore customer loyalty,” Fox Business quoted him as saying. Low prices get people through the door, said Kulasooriya, warning that “if restaurants can’t maintain quality while they push out quantity, the $5 buzz won’t last. In fact, the buzz may hinder customer retention once prices even out.” He also predicted that winning brands “will prioritize menu innovation.”
