Notes on value
Notes on value
New data + a Friday quickie: Part pricing, part marketing, all important
The value meal is hip again.
McDonald’s launched a $5 meal deal in June. The effort was part of a nationwide focus on value, and McDonald’s isn’t alone. Plenty of other fast food restaurants were quick to promote their own offerings over the summer— a $7 “cravings box” at Taco Bell, a $5 “your way” meal at Burger King. On Thursday, McDonald’s announced it’ll extend its $5 promo through December.
After three inflation-filled years, restaurants are taking a hit. Large chains have reported traffic declines for months. Inflation may be cooling slightly, but the value push isn’t just a fast food thing — plenty of independent restaurants are getting in on the action.
According to SpotOn, a point of sale company, independent restaurants on the platform added 1,547 ‘combo’ items to menus in the month of August. They added 221 ‘‘BOGO’ items (that’s buy-one-get-one, an abbreviation my brain will always attribute to Payless Shoes) and 205 ‘deal’ items. Per a company rep, trends in value include personalization (“pick two”) and promos tied to events like NFL games were especially popular.
It’s not news that we all like to save a buck. But a renewed focus on value has defined plenty of restaurants this year.
Recent data from the National Restaurant Association shows 7 in 10 adults look for deals when they eat at a restaurant. In the same report, nearly all restaurant operators — 9 in 10 — said diners are more value-conscious than they used to be.
‘Value’ is more than cash savings.
Combos, packages, and deals help the kitchen, too. When Shake Shack announced it would introduce combo meals earlier this year, I pegged it as a value play. But in a summer interview with Shake Shack chief financial officer Katie Fogertey, she explained the concept actually launched as a way to optimize the drive-thru.
“It’s really about helping our kitchens and our operators have a more standard process for moving guests through the drive through, so that we can reduce that total experience time,” she told me. “We think that that's something that [guests] value, and that will be a frequency driver over time.”
What else?
More value as marketing: Consumer-focused publications are (finally) starting to explain how restaurants work with regularity. This week on Eater, a handful of restaurant chefs at varying concepts explain pricing challenges. And last week on Grub Street: Why does this glass of wine cost $21? There’s more to wine math than simple inflation.
What’s happening to casual restaurants? In the recent past, a number of casual restaurant chains have filed for bankruptcy: Rubios, Buca Di Beppo, Red Lobster, now BurgerFi. What’s going on? (Seriously. I’m asking!) — CNN
The Independent Restaurant Coalition is taking on “reservation piracy” nationally. In a release, the org says its members are traveling to Washington, D.C. to meet with members of Congress and policy leaders next week. Lawmakers in New York have targeted these third-party services, but this is the first national effort I’ve heard about.
Both major presidential candidates have proposed eliminating taxes on tips. It’s another major and contentious chapter in the tipping-in-America saga. If we’re talking about “tip fatigue” now… — New York Times