Fast Feeders Focus on Pricier Meals, Higher Margins

Many QSRs cut back on value meals and dollar menus.

June 24, 2021

Wendy's Fast Food Restaurant

ALEXANDRIA, Va.—Some foodservice operators are reducing their “value” offerings, which typically contain a menu item with a side and a drink for $5 or less, reports Business Insider, and they are now touting larger combo meals and more expensive menu items.

"Value menu items are not really profit drivers," said Peter Saleh, BTIG analyst. "They're designed to drive traffic."

The trend of cutting cheaper, lower-margin menu items has been going on for several years. McDonald's killed its iconic Dollar Menu in 2013 and cut some less profitable items during the pandemic, such as the Little Mac and the Double Big Mac, chicken tenders and salads. Most recently, McDonald’s partnered with celebrities to promote more expensive combo deals, including the $6 Travis Scott meal and the $10 BTS meal.

Other chains have reduced discount offers as well. Domino's has eliminated more aggressive promotions, such as Boost Week, which sells half-price pizzas online. KFC stopped marketing its "$5 Fill Up" meal last year and is promoting family meal deals that can cost up to $30.

At Wendy’s, more expensive burgers are on the chain’s online ordering site. A spokesperson for the company said more customers are purchasing higher-end offerings, such as the $5.69 Bourbon Bacon Cheeseburger and a $6.19 Pretzel Bacon Pub Cheeseburger, both with single patties.

"We're trading folks up into our best, highest-quality food items," said Todd Penegor, CEO, Wendy’s, during the chain's earnings call in May.

But brands aren't completely scrapping value menus. Taco Bell reintroduced its $5 Grande Stacker Box in late 2020, while Burger King launched a dollar menu, called the $1 Your Way menu, in December.

As NACS Daily reported earlier this week, McDonald’s has announced other initiatives to keep bringing customers back for more. The fast-food giant will soon take its loyalty program nationwide in the United States and is planning for a bounce back for on-premise dining.

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