ALEXANDRIA, Va.—High costs of food and labor are forcing fast-food chains to up their prices on value deals and move to digital promotions only, reports CNBC.
According to Technomic Ignite data, the cost of breakfast value meals rose 19.6%, and snack value meals increased 11.5% in the third quarter of 2021. However, the overall average price of value meals fell by 1.3% compared with the year-ago period, the research group said. Seventeen percent more restaurant operators were offering value meals on their menus in July through September, compared with the same time a year ago.
Little Caesars’ $5 Hot-N-Ready pizza deal is now 11% higher at $5.55—the first time in more than two decades the chain raised prices on the deal.
However, some fast-food chains are holding the increased costs for customers who do not order digitally.
Popeye’s Big Box Deal is back after four years, but depending on how a customer orders it, the cost goes up by $1. If ordered through pickup through the Popeye’s app or website, it costs $5, but if they order it at the restaurant or the drive-thru, the deal costs $1 more. Restaurant Brands International, which owns the Popeye’s brand, told CNBC that it designed this year’s promotion to help drive digital growth.
Domino’s $7.99 weeklong carryout offer is being revamped, though the price is staying the same. It’s now only available to digital customers, and the deal includes only eight chicken wings or boneless wings instead of 10.
“Moving the offer to online has several benefits,” Domino’s CEO Ritch Allison told investors at the virtual ICR Conference. “One is a higher ticket, two is a lower cost to serve because we’re not having to answer the phones and third is that we get access to critical data.”
Fast-food restaurants also have increased competition from third-party delivery apps that promise delivery from convenience stores, restaurants and grocery stores in less than 30 minutes. Instacart is now offering prepared meals from grocery stores through its Ready Meals Hub. The service is available at 4,100 stores in 35 states and offers foods such as grab-and-go salads, sandwiches, soups, sushi and rotisserie chicken.