Fast-food chains compete with $5 meal deals to attract customers amid declining sales

From CNBC: 2024-07-28 08:00:01

Fast-food chains like McDonald’s, Taco Bell, and Burger King are offering $5 meal deals to attract customers amid declining sales. Consumers are cutting back on fast-food spending due to high prices, leading to a shift in dining preferences from fast food to casual dining. Investors are skeptical about the expected impact of these promotions on sales, causing stock prices to drop. Subway’s $5 footlong deal serves as a cautionary tale for the fast-food industry.

Value meals are not only about growing traffic but also converting customers to higher-ticket sales. Fast-food chains are struggling to maintain profits and sustainability with discounts. Franchisees are skeptical of these promotions as they can hurt their profits. The National Owners Association at McDonald’s has pushed back against the chain’s unpopular deals, highlighting the tension between franchisees and management.

Franchisees and investors alike are skeptical about the effectiveness of $5 meal deals in boosting sales. Despite initial resistance, McDonald’s extended its value meal promotion, which has shown promising results in increasing foot traffic. Other chains like Buffalo Wild Wings, Starbucks, and Chili’s have also benefited from discounts in driving customer visits. Analysts suggest that the $5 meal deal may prevent customers from going elsewhere rather than being a significant sales driver.



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