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Higher prices, leaner portions, apps – fast food offerings are changing

By on August 6, 2022 0

Fast food chains are increasing the value of their burgers, pizzas and tacos as inflation squeezes budgets – but expect higher prices, leaner portions and more offers enticing people to sign up to rewards programs as companies rethink their value strategies.

Citing rising costs, Domino’s Pizza earlier this year raised the price of its Mix & Match delivery offer from $5.99 to $6.99 and made its $7.99 national offer available for orders only. digital. Burger King has removed the Whopper from its value menu and reduced its nuggets from 10 pieces to eight pieces. For the first time, Yelp said customers were mentioning “shrinkflation” in their restaurant reviews, most often at places with affordable deals like hot dogs, burgers and pizza.

“We’ve seen companies fine-tune their value menus across the board,” said Michael Schaefer, global head of food and beverage at Euromonitor International. “We’re seeing fewer total items, limited price increases, smaller items.”

These changes mark the latest chapter in the continued evolution of the traditional value pairings that have become the hallmark of many fast food chains. In the years since McDonald’s ditched its popular Dollar Menu and Subway curbed its $5 Footlong campaign, experts say the industry has tried to reduce its reliance on such gnawing promotions. profit margins.

And as companies face rising ingredient and labor costs, the drive to rethink value strategies takes on new urgency.

Even when they quietly raise prices or change menu items, experts say fast food companies are increasingly focusing their value strategies on mobile apps and rewards programs that would allow them to deliver personalized offers. , while earning more money on every customer.

At McDonald’s, for example, customers can get a free order of large fries and 1,500 bonus points for downloading their app and signing up for their rewards program.

On an earnings call last month, McDonald’s executives said the program encourages customers to visit more frequently and noted another benefit it could bring – the ability to potentially offer more personalized offers.

National promotions, on the other hand, offer discounts even to people who would have paid more, said Chris Kempczinski, CEO of McDonald’s.

“There’s a lot of waste in there,” he said.

Channels offering rewards programs include Chipotle, Chik-fil-A, Dunkin’ Donuts, Papa Johns, Wendy’s and Burger King, which allows members to earn “crowns” with purchases that can be redeemed for menu items.

Personalized offers can be a win-win by giving customers discounts on items they actually want, while allowing businesses to maintain profit margins, said Francois Acerra, director of consumer research and analytics. for Revenue Management Solutions, a restaurant data analytics company.

“Brands can say ‘Oh, it’s because of inflation,’ but I think brands have been trying to get away from those low prices for a while,” Acerra said. “Brands are poised to deliver value to consumers as long as they can leverage customer purchase history to maximize long-term customer value.”

Apps help businesses do just that. Given how often people check their phones, an app on a person’s home screen is “like the billboard that keeps on giving,” said Adam Blacker, director of content and communications for Apptopia, a data analytics company.

“The rate at which we watch it, the importance it has to you, just seeing that logo every day can have an effect,” he said.

Apps can also provide information about what and when customers order and what promotions they respond to, helping businesses refine their push notification strategies for offers.

Still, rewards programs remain a relatively new and developing area for many companies. In the meantime, one of the ways companies are providing more targeted offers is by giving flexibility to local carriers.

McDonald’s executives said the chain will run national promotions, such as its $1, $2, $3 menu, but regions can select which products to offer. Papa John’s executives also noted the leeway their restaurants have to adjust offerings.

“A discount in San Francisco is different than a discount in Atlanta and Ohio,” CEO Rob Lynch said during the company’s earnings call.

But even as they become more targeted in the coming years, experts say fast-food chains will need to keep offering eye-catching deals to attract certain customers.

“They may look a little different from years past, but there will always be a place for high-visibility, low-cost items that drive traffic and higher-margin add-ons,” Euromonitor’s Schaefer said.