Taco Bell and McDonald's are gearing up for a cutthroat battle of the fast-food dollar menus

Hollis Johnson$US1 breakfast items from Taco Bell.
  • Taco Bell is expanding its $US1 menu with 20 new offerings planned for 2018.
  • McDonald’s is also resurrecting its Dollar Menu in January.
  • Taco Bell’s CEO says that the competition over value-conscious fast-food diners is about to heat up.

Good news bargain shoppers: the dollar menu is making a comeback.

Taco Bell announced it is expanding its dollar menu with plans to roll out 20 $US1 limited-time offerings throughout 2018, in addition to the 20 $US1 permanent menu items. In mid-December, the chain is rolling out the $US1 Stacker, which features layers of beef and cheese between a grilled tortilla.

Taco BellTaco Bell

“People ask the question: Who orders from the value menu?” Taco Bell CEO Brian Niccol told Business Insider.

“The real question is, who doesn’t? … It doesn’t matter if you’re making $US40,000 or $US140,000, young, old.”

According to Taco Bell, $US1 menu items generated $US500 million in sales in 2017. $US5 boxes generated an additional $US1 billion in sales.

As Taco Bell doubles down on value, McDonald’s is also resurrecting its iconic dollar menu.

McDonald’s announced on Monday that it will introduce new menus with items priced at $US1, $US2, and $US3 in early January. Deals include any size of soft drinks and cheeseburgers for $US1, bacon McDoubles and McCafe drinks for $US2, and Happy Meals and triple cheeseburgers for $US3, Reuters reported.

Executives acknowledged that McDonald’s has struggled to attract value-minded customers since killing the Dollar Menu in 2013. With McDonald’s and Taco Bell doubling down on the dollar menu, it looks like early 2018 is shaping up to be a true battle for bargain shoppers.

Taco BellTaco BellWhile McDonald’s sticks with fast-food classic, Taco Bell can debut wild limited-time offerings, like Cap’N Crunch’s Delights.

“Make no mistake, when the market leader starts to do things really well in different places, it just means you have to be that much more committed to your specific strategy,” Niccol said. “It’s going to be more competitive [when McDonald’s rolls out its new value menu], no doubt.”

Niccol said he’s optimistic about Taco Bell’s strategy, in part because the chain is able to roll out more creative – and sometimes absurd – new products, while McDonald’s focuses on more traditional offerings. And, while he says customers’ financial situations have overall improved since Taco Bell rolled out its dollar menu in 2014, there is still as deep desire for value.

“With the technology of social media and the mindset of the recession still fresh with people, they believe they can have access to a lot of experiences that maybe in the past, they would have had to pay a premium,” Niccol said.

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