America’s biggest fast-food chains are engaging in a new price war.
Wendy’s just started offering a “4 for $US4” meal that includes a junior bacon cheeseburger, four chicken nuggets, small fries, and a drink, priced at $US4.
The Wendy’s deal follows a similar meal discount from McDonald’s this summer, in which the chain was offering a double cheeseburger and small fries combo for $US2.50.
Now McDonald’s is planning to go even further to reestablish itself as the low-price leader in fast food, according to an internal email to franchisees.
“Regaining our dominance in value by aligning around a national value platform… is the next step,” McDonald’s US President Mike Andres wrote in the email, according to a report by Bloomberg. He didn’t provide any specific details on the new platform.
Burger King is also lowering prices.
The chain has been offering a 10-piece chicken nugget deal for $US1.49, as well as coupons for other items through its mobile app.
Meanwhile KFC has been offering a $US5 “Fill Up” meal that includes an entree, a drink, several sides, and a dessert — all for $US5.
The meal is largely responsible for recent sales growth at KFC, according to Citi Research analysts.
The price wars indicate that despite lower gas prices and signs of an improving economy, customers are still demanding deep discounts from fast-food chains.
Excessive discounts are hurting the companies’ profits, however, so all four chains are pricing promotions a little higher than in the past.
Instead of discounting individual items around $US1 to attract customers, the chains are grouping menu items together and offering a single discount for the whole meal, so tickets are closer to $US4 or $US5.
McDonald’s started this transformation two years ago when it axed its “Dollar Menu” and replaced it with the “Dollar Menu & More,” which included items that cost more than $US1.
Wendy’s made a similar move around the same time, turning its “99-cent Value Menu” into a “Right Price Right Size” menu with items that cost more than 99 cents.
The new discount menus have failed to wow customers, however, which is why the chains are now renewing their focus on promotions, Nation’s Restaurant News reports.
“Some of the challenges we’ve had in the US have been somewhat self-inflicted,” McDonald’s CEO Steve Easterbrook said during a conference call earlier this year. “We moved away from the Dollar Menu and didn’t replace it with significant enough value in the eyes of consumers.”
Wendy’s has also admitted failures with its promotional menu.
“We know our Right Price, Right Size Menu is not a sufficient value proposition to continue to attract value-seeking consumers,” Wendy’s CEO Emil Brolick told NRN.
No matter what happens with the new price war between the nation’s fast-food giants, it will definitely end up being a win for consumers.
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