Fast-Food Chains Ditch Discounts for Value Innovation

U.S. fast-food chains have struggled to attract price-conscious diners in the second quarter, despite offering discounts and promotions. McDonald's and rivals like Wendy's and Wingstop reported declining sales, with some blaming execution rather than strategy for their struggles.

Taco Bell was a standout performer, however, thanks to its $5, $7, and $9 meal boxes and continued menu innovation. The chain paired bargains with quality improvements and a smoother customer experience to attract budget-conscious consumers without resorting to blanket discounting.

Rachel Royster of Connections, a foodservice consultancy, noted that value succeeds when it's 'really clear and simple' and doesn't feel like a 'bait-and-switch'. Taco Bell reported a 7% rise in same-store sales during the quarter, while global comparable sales at McDonald's rose just 1.3%. Wendy's and Wingstop, on the other hand, posted declines of 7% and 7.5%, respectively.

Burger King was another winner, crediting promotions like its '2 for $5' and '3 for $7' offers with strong U.S. sales growth. Executives at Restaurant Brands, the parent company, said they were doing discounts creatively rather than relying on deep discounting. Domino's Pizza also benefited from value-focused offerings and loyalty initiatives.