Restaurants are ramping up their value game, rolling out affordable bundles and promotions aimed at budget-conscious consumers to compete with McDonald's.
McDonald's brought back its Extra Value Meals, offering customers eight meal bundles for breakfast, lunch and dinner, saving customers 15% more than if they bought items separately.
The move is far from unsurprising. Mark Wasilefsky, head of restaurant and franchise finance at TD Bank, predicted that McDonald's strategy to double down on its value proposition to rejuvenate traffic among its cost-conscious customers would force its top rivals to follow suit with discounts of their own, especially during the mornings.
"The restaurant industry is responding to what is effectively a period of some of the lowest measures of consumer sentiment in the last 50 years, and during these times, consumers want to feel like they're getting the best value for their money," Wasilefsky told FOX Business.
With McDonald's recent lean on value, "most scaled restaurants are working very hard with their existing menus and ingredients along with their back-office finance teams to derive wholesome, satisfying and substantive offerings at competitive prices to both retain existing clients and drive new customers," Wasilefsky said.
Shortly after McDonald's announced it was bringing back Extra Value Meals for the first time since 2019, IHOP announced it was introducing an everyday value menu as part of its core offerings.
MCDONALD'S BRINGS BACK EXTRA VALUE MEALS TO LURE BUDGET-CONSCIOUS CUSTOMERS
IHOP announced that its Value Menu will feature four complete breakfast meals and sides that will be available every day from 7 a.m. to 10 p.m. for only $6 at participating restaurants nationwide.
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The company said the move is its way of reinforcing the brand’s position as a "wallet-friendly" destination.
"We know our guests are more value conscious than ever, so the launch of IHOP’s Value Menu is a direct response to what they want — delicious food, variety, abundance and affordability without compromise, seven days a week, IHOP President Lawrence Kim.
American fast-food chain Jack in the Box announced that, beginning Oct. 1, it will introduce larger cup sizes —about a 25% increase in ounces — while also lowering prices across drive-thru menu boards. The changes will bring just over 60% of Jack’s combo meals under $10 in most markets.
On Sept.18, the restaurant chain brought back Monster Tacos with a two for $3 deal and introduced new monster-sized snacks, including a Monster Churro and Monster Mozzarella Stick and plans to roll out more deals throughout the year.
Burger King launched deals for its loyal customers between Sept. 15 and Sept. 21 in celebration of National Cheesebuger Day. The chain is offering seven straight days of free items, including breakfast, burgers and chicken, each tied to a $1 order.
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Wasilefsky called McDonald's limited-time promotion a "power move" given how massive McDonald's presence is in the U.S. He previously told FOX Business that while the deep discount will force rivals to roll out similar deals, they likely won’t be able to top McDonald’s significant percentage cut.
"When you look at margin, 15% is an incredible discount," Wasilefsky said shortly after McDonald's announced its value deals. "I think other brands will have to follow suit depending on the day part. If it's breakfast, and they compete in the breakfast space, they're going to have to discount their breakfast."
The fast-food sector has faced a combination of challenges, from margin pressures due to supply chain issues and higher labor costs with minimum-wage increases to subdued traffic industrywide, with only a few exceptions, such as Chipotle and Cava, according to Wasilefsky.
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As of July, menu prices at limited-service restaurants, which include fast-food eateries, rose by 3.3% year over year, according to data from the National Restaurant Association. Menu prices at limited-service restaurants peaked at 8.2% in April 2023, according to the data.
Wasilefsky underscored that the goal for the industry is not just to boost short-term sales with a limited-time promotion, but to shift long-term customer behavior.
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