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Dollar Menus Still Drive Traffic

The downside is that selling items for a buck can eat into profits.
June 29, 2011

CHICAGO - The value meal has seen a resurgence in recent years because the recession was keeping consumers out of eateries, but the flip side is that while the discount menus up traffic, they are hard on the bottom line, Advertising Age reports.

"Dollar menus can be great traffic drivers, but they're not great profit drivers," said Sharon Zackfia, an analyst with William Blair. Behind dollar menus is the hope that a customer might come in to the restaurant because of the discount items but purchase a higher-priced beverage or other item.

Not all restaurants have been happy with losing money on value meal items. Burger King franchisees protested vigorously when the chain marketed a double cheeseburger for a dollar, eventually persuading corporate to up the price.

However, that hasn��t stopped fast-food restaurants from keeping dollar items on the menu. McDonald��s advertises its breakfast dollar menu in some areas, while Burger King has been promoting Stackers line of products.

But more and more, the restaurants are pushing its drinks and core products these days. "Putting marketing against their core product is the smartest thing they've done in a long time," said Darren Tristano, Technomic executive vice president.

Beverages are receiving more marketing campaigns because of the higher profits. "It's partially because of the time of year, but drinks are also extremely profitable," said Dick Adams, a restaurant consultant.