Restaurant prices are up around 30% from pre-pandemic levels, according to the Labor Department, and QSR chains are struggling to keep diners coming. Promotions, discounts and value meal deals have become the U.S. restaurant industry’s go-to lure to capture customers, reported The Wall Street Journal.
An estimated 81% of North American consumers have ordered a fast-food value meal in the past three months, according to a September survey of 1,793 diners by market-research firm Intouch Insight. Around half said the promotions prompted them to eat out more often or switch chains.
“But deals aren’t always translating to profit and don’t necessarily keep customers coming back, companies and analysts said, leading restaurant-chain executives to gut-check whether discounts and freebies are paying off. Starbucks earlier this year dabbled with a coffee and breakfast item bundle starting at $5, but months later yanked it, saying the new discounts weren’t working,” wrote the WSJ.
According to the WSJ, KFC parent company Yum Brands and Popeyes owner Restaurant Brands International both said earlier this month that their U.S. offerings hadn’t pumped up traffic as much as hoped at their chicken-oriented restaurants.
Traffic to QSRs was down this year through September compared with last year’s period, restaurant consulting firm Revenue Management Solutions (RMS) said. The increase in affordable meal options likely prevented it from falling further, the firm said.
But RMS expects restaurant traffic to continue to decline this year. “Customers are quick to reduce their fast-food frequency once they see deals end,” the firm’s analysts said.
Promotions are delivering some success at McDonald’s, wrote the WSJ. The QSR said last month that its $5 meal bundle boosted traffic with lower-income consumers in the U.S. for the first time in roughly a year.
McDonald’s has said that in January it will introduce a new menu that includes the $5 meal deal, app offers and a “buy one, get one for $1” promotion.