Fast-Food Chains Refocus on Value

Jack in the Box, McDonald’s and Taco Bell have new offerings on their value menus.

May 08, 2018

OAK BROOK, Ill. – A few years ago, fast-food chains were embroiled in a battle over value, each chain offering better deals at lower price points. But, when those offerings pulled in discount-seeking customers without translating that to brand loyalty, many QSRs trimmed their value menus—a strategy that backfired for many chains, Nation’s Restaurant News reports.

“They moved away from value and it hurt them,” said Bonnie Riggs, analyst with The NPD Group. “They needed to refocus on value.”

Fast-food chains have taken notice and many are revamping their value menus. Earlier this year, McDonald’s debuted a new value menu with $1, $2 and $3 options, while Taco Bell put seven additional items on its Cravings Menu, including Nacho Fries for $1. Jack in the Box added a Value Done Jack’s Way menu with $1 and $2 items, plus $3 and $4 meal combos.

While QSRs are concerned that value menus drive customers to order only lower-price-point items, but NPD found that on average, 72% of customers who bought from the value menu also purchased items from the regular menu. “The initial hope was to get new and lapsed users visiting again because of the value proposition, but that didn’t happen,” Riggs said. “Instead, heavier users and families with kids took advantage of the value menu.”

“It was a successful pricing strategy for these three brands,” Riggs said. “Chains need a value proposition to stay competitive with these offers.”