Fast-food chains are upping the value of their burgers, pizzas and tacos as inflation squeezes budgets – but expect higher prices, fewer servings and more deals to come. get people to sign up for rewards programs as companies rethink their value strategy.
Due to rising costs, Domino’s Pizza earlier this year increased the price of its Mix & Match delivery deal from $5.99 to $6.99 and launched a nationwide fulfillment offer worth 7.99 dollars for digital orders only. Burger King removed the Whopper from its value menu and cut 10 nuggets down to 8 pieces. For the first time, Yelp said customers are referring to “deflation” in their restaurant reviews, most commonly at places that serve affordable fare like hot dogs, hamburgers and pizza .
“We’ve seen companies adapt their value menus across the board,” said Michael Schaefer, global head of food and beverage at market researcher Euromonitor International. “We see fewer items total, limited price increases, smaller items.”
These changes signal the latest chapter in the continuing evolution of the traditional value transactions that have become the hallmarks of many fast food chains. In the years since McDonald’s dropped the popular Dollar Menu and Subway splurged on a $5 Footlong campaign, experts say the industry has tried to reduce its reliance on food promotions. to such a profit margin.
And as companies face rising material and labor costs, there is renewed urgency for a rethinking of value strategies.
Even as they quietly raise prices or change menu items, experts say fast food companies are increasingly focusing on value strategies around mobile apps. and rewards programs that allow them to offer personalized deals and earn more from each customer.
At McDonald’s, for example, customer can get a free large order of french fries and 1,500 bonus points for downloading the app and signing up for its rewards program.
During an earnings call last month, McDonald’s executives said the program helps customers visit more often, and noted another benefit it could offer — the ability to ultimately offer more Transactions are more personalized.
In contrast, national promotions offer discounts even to those who pay more, said McDonald’s CEO Chris Kempczinski.
“There’s a lot of waste in that,” he said.
Among the chains that offer rewards programs are Chipotle, Chik-fil-A, Dunkin’ Donuts, Papa Johns, Wendy’s and Burger King, that allows members to earn “crowns” on purchases that can be exchanged for menu items.
Francois Acerra, director of consumer research and analytics for Revenue Management Solutions, a restaurant data analytics firm, says personalized offers can be mutually beneficial by reducing prices. customers for what they really want, while allowing companies to maintain profit margins.
“Brands might say ‘Oh, that’s inflation,’ but I think brands have been trying to stay away from those lower prices for quite some time,” Acerra said. “Brands are willing to provide value to consumers as long as they can leverage a customer’s purchase history to maximize customer lifetime value.”
Apps help companies do just that. Adam Blacker, director of content and communications for Apptopia, a data analytics company, said that given how often people check their phones, an app on one’s home screen “is like a blackboard.” advertising continues to work.”
“The rate at which we look at it, how important it is to you, just seeing that logo every day can have an effect,” he said.
Apps can also provide information about what and when customers are ordering and what promotions they respond to, helping companies refine push notification strategies for deals .
However, rewards programs are still a relatively new and growing area for many companies. Meanwhile, one way companies are offering more targeted deals is by providing local operators with flexibility.
McDonald’s executives said the chain will run national promotions, such as $1, $2, $3 menus, but regions can choose which products to offer. Papa John executives also note that their restaurants will have to adjust transactions shortly.
“Discounts in San Francisco are different from discounts in Atlanta and Ohio,” Chief Executive Officer Rob Lynch said on the company’s earnings call.
But even if they become more of a target in the coming years, experts say fast food chains will still need to continue to offer attractive deals to attract certain customers.
“They may look a bit different than in previous years, but there will always be room for low-priced, high-visibility items that help drive traffic and add-ons,” says Euromonitor’s Schaefer. more profitable,” said Schaefer of Euromonitor.