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McDonald’s and other fast food chains are raising prices even more. You might want to consider going for a slower burger. At least, that’s what Applebee’s wants you to think.
“You can buy our burgers for $9.99,” John Payton, CEO of Applebee’s parent company Dine Brands, said in an interview with CNN. With that in mind, he said, “Why would he take a $10 hamburger out of his car when he can eat it out of the bag?”
Peyton’s sales pitch Touching the hearts of customers Might help convince diners Eating at a sit-down restaurant may seem like a luxury to them.
For a while, restaurant customers cut back on transactions and traded expensive meals for cheaper ones, but still continued to eat out. Now, some people are trading out entirely in response to rising menu prices. Instead of choosing cheaper restaurants and meals, we eat more at home and spend less when we go out.
That means restaurants must fight for these cost-conscious consumers. And now it’s not just burger chain versus burger chain.
Fast-food restaurants have raised prices in recent years, so restaurants like Applebee’s could run promotions that end up costing almost as much as a fast-food lunch, giving them a chance to steal those customers away. giving.
Payton said this overlap presents “new opportunities.” Lunch at McDonald’s now costs about the same as lunch at Applebee’s. At Applebee’s, you sit at a table and have your meal delivered to you by a server. Pointing it out is a new way of bidding for your customers.
Applebee’s is offering the deal in the hopes that the price will tell the whole story, even though sales are slumping as lower-income customers leave. Chili’s, on the other hand, makes the comparison more obvious.
The stakes are high for them, and the fast food chains they now compete with.
Years of soaring prices have reduced traffic; Henkes said restaurants have been fighting over the lack of customers.
“The pie is smaller today than it was a year ago,” he says. “You’re competing for a smaller market share. So you’re more competitive.”
In particular, the prices of fast food are soaring. “Fast food has gotten really expensive,” Henkes said. “Certainly you can compare it to what it was 12 to 18 months ago and compare it to casual sit-down restaurants today.”
Prices at fast-food and fast-casual restaurants rose 5% in the 12 months ending in March, not adjusted for seasonal fluctuations, according to data from the Bureau of Labor Statistics. During this period, full-service menu prices increased by 3.2% and grocery prices increased by 1.2%.
McDonald’s said several years ago that it could raise prices without losing too many customers. However, it is currently struggling to attract low-income customers.
“The battleground is certainly with low-income consumers,” CEO Chris Kempczinski said on a conference call with analysts in February. The following month, Chief Financial Officer Ian Bowden acknowledged on a conference call with another analyst that “the consumer environment is tough.”
According to Bloomberg, the chain is developing a $5 menu to capture those customers.
Things aren’t much better at Applebee’s.
Will be available in U.S. Applebee’s stores for at least a year It fell 4.6% in the first quarter. During that period, customers with annual incomes of less than $50,000 visited the store less frequently, and when they did visit, they spent less, Payton said, adding that this group made up about 45% of Applebee’s customers. added.
“For several quarters, we’ve been asking ourselves when we’re going to see the impact of inflation, the broader economy and interest rates on our guests,” he said. “We really started to see it in the first quarter.”
“We think it’s going to be a battle for wallet share and market share throughout the year,” he added.
With fast food prices soaring, sit-down restaurants can stake a claim.
People have taken to social channels to complain about fast food prices, with some complaining about the price of McDonald’s burgers and hash browns. Chili’s is taking note.
“Our social media team has been paying close attention to conversations about consumers being dissatisfied with fast food prices,” said Kevin Hochman, president of Chili’s and CEO of parent company Brinker International. said on a conference call with analysts in April. In response, Chili’s decided to run ads that “use fast food as a foil,” he said.
Jeffrey Greenberg/Universal Images Group/Getty Images
Chili’s is bidding for McDonald’s customers.
In an April press release, the chain announced it was adding a new burger to its Three for Me value menu that it described as having “twice the beef of a Big Mac and a taste fast food lovers will appreciate.” For $10.99, customers can get a burger, an app, and a drink.
Chili’s in X Ask if Chili’s is better than fast foodHe promised a reward to anyone who answered “yes.” Chili’s also ran a video ad that compared her food products favorably to fast-food hamburgers.
But it may not be so easy. Getting people to go to Chili’s instead of McDonald’s may be a stretch, said David Henkes, senior principal at Technomic, a food industry research and consulting firm.
One of the problems with chains like Chili’s and Applebee’s is that they compete on price rather than punctuality.
“Generally, people go to sit-down restaurants on different occasions than they go to fast food restaurants,” he noted. You might expect him to spend an hour at Chili’s or Applebee’s and skip past McDonald’s.
Still, campaigns like Chile’s have recently Food is relatively cheap.
“I think it’s a good message to plant the seed of, ‘Hey, we’re worth enough,'” Henkes said.
