Fast-food chains have been fighting a value perception issue and have embraced deals in order to win over cost-conscious customers.
Customers have become wary of prices because prices have been going up.
Prices for food away from home have climbed 27.2% since June 2019, according to data from the Bureau of Labor Statistics. In response, restaurant traffic has fallen, and sales are lagging as consumers spend less money dining out, no longer convinced that it’s a good deal.
Many customers have noticed that ordering two combo meals at major fast-food chains can now push past $20, a psychological threshold that once defined quick, affordable family dining.
McDonald’s CEO Chris Kempczinski acknowledged during a July 2024 earnings call that the chain’s perceived value had slipped with consumers.
“For 70 years, McDonald’s has defined value in our industry, and we are taking meaningful actions across the world to assert our leadership,” he said.
Since then, the chain has introduced $5 meal deals, brought back the Snack Wrap at a $2.99 price point, and has kept its focus on value.
That’s a lesson Domino’s has also learned with its recent Best Deal Ever promotion.
Domino’s, McDonald’s see customers struggling
Like McDonald’s, Domino’s has acknowledged the struggles facing lower-income customers.
Kempczinski talked about that during McDonald’s Q3 earnings call.
“In the U.S., we continue to see a bifurcated consumer base with QSR traffic from lower income consumers declining nearly double digits in the third quarter, a trend that’s persisted for nearly 2 years. In contrast, QSR traffic growth among higher income consumers remained strong, increasing nearly double digits in the quarter,” he said.
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As fast-food chains confront this value reset, Domino’s has leaned more forcefully into aggressive pricing to protect traffic and loyalty.
Domino’s CEO Russell Weiner noted that his chain has served the lower-income audience well.
“The income cohort pressure on the lower income customers had been seen kind of throughout restaurants,” he shared during Domino’s third-quarter earnings call.
“What I think speaks to the kind of renowned value we have out there is we actually were up amongst all income groups for the quarter, and that’s our second quarter in a row where we’re up against the lower-income customers. So no matter what pressures out there, where we seem to be breaking the trend,” Weiner added.
Domino’s has leaned into value.
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Domino’s bets big on value
Domino’s has followed McDonald’s by leaning into value offerings. That’s something Weiner talked about during the call.
“Let’s start with our Best Deal Ever promotion, which was a meaningful driver of our strong U.S. results in Q3. In my opinion, Best Deal Ever is, well, the best deal in restaurants. The price point screens renowned value, and the taste drives our most delicious food perceptions,” he said.
What is Domino’s Best Deal Ever?
- Domino’s “Best Deal Ever” lets customers order any pizza with any toppings for $9.99 each for a limited time online.
- The deal covers multiple crust types, including Hand Tossed, Handmade Pan, New York Style, Gluten Free, and Crunchy Thin Crust.
- It includes custom toppings and secret menu pizza options recommended by Domino’s chefs, maximizing value and customization.
Source: Domino’s Investor Relations
Weiner thinks the promotion works because it gives people exactly what they want.
“After all, consumers are building and eating their dream pizzas. In a world where prices have gone up and discounts never seem to be on the items you truly want, Domino’s gives customers their favorite pizzas at our best price,” he said.
Value is about more than price
Industry leaders have stressed that offering value requires more than low prices.
The typical Checkers/Rally’s customer frequents a quick-serve establishment roughly 20 times a month, according to QSR Magazine.
“They’re visiting a [quick serve] almost every single day. So to stand out and compete and win, you have to offer great value,” Rallys/Checkers Chief Development Officer Jennifer Durham told the magazine. “And value is relative, because it’s about what you get for the money. It’s not just the lowest price.”
What constitutes value, however, changes depending upon the restaurant.
“The contrast with fast casual is noticeable. There are no value menus, and more important, no value meals in fast casual — no discounts or bundling,” Intellaprice President Leslie Kerr told QSR. “And what’s more, there are no apologies. For them, ‘value’ means good food.”
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