Fast-Food Chains Ditch Discounts in Favor of Menu Innovation
US fast-food chains like McDonald's are finding that discounts alone are no longer enough to keep customers coming back. Value meals and promotions have been a reliable traffic driver for the past two years, but now chains need to offer more than just cheap deals.
Taco Bell is a prime example of this shift in strategy. The chain reported a 7% rise in same-store sales during the second quarter, thanks to its $5, $7, and $9 meal boxes, which paired bargains with menu innovation and quality improvements.
McDonald's struggled despite its under-$3 menu and a $4 breakfast meal. CEO Chris Kempczinski blamed execution rather than strategy for the traffic shortfall, saying that loyal customers accounted for about two-thirds of the problem.
Other chains like Wendy's and Wingstop found that promotions did little to offset pressure on lower-income consumers. Wingstop CEO Michael Skipworth said its sales sagged in urban areas, where households typically faced more financial pressure, even as visits climbed in higher-income markets.