Restaurants are looking for price-conscious customers

The topic of “relative value” has been chopped up and distorted in recent weeks. As Kura Sushi recently told investors, the entire industry is generally portrayed as more expensive – and largely rightly so. According to the BLS, full-service prices rose 0.6 percent in June compared to a year ago. That represents a 3.9 percent year-over-year increase. Quick service was 0.2 percent more expensive for the month and 4.3 percent more expensive year to date. Takeout prices rose 0.1 percent and 1.1 percent, respectively.

Restaurants have been outperforming grocery stores for some time now.

This climate has generally led to some competitive responses – brands like Kura Sushi are trying to cautiously raise prices (4 percent in Q3) to protect the perceived value they entered this inflationary period with. Olive Garden owner Darden has rejected price discounts, wanting instead to focus on profitable sales growth and the idea that “guests will tell others how good their restaurant is and then come to our restaurants.” And then there are many chains introducing new offerings in hopes of reviving customer traffic and meeting the current circumstances.

As you’ll see in the examples below, most won’t offer their core deals at a discounted price, given how difficult it is to raise the price back up. Rather, they’ll offer deals at a specific price that they can let run and then remove later, and repeat the whole thing.

Starting with Buffalo Wild Wings, the brand recently introduced unlimited boneless wings for $19.99 every Monday and Wednesday. The offer came on May 13 and was supposed to run through July 10, but the date was pushed back to August 14 after Joey Chestnut ate 200 boneless wings in 37 minutes and 48 seconds. The brand kicked off the interaction on X with a challenge. Of course, he accepted, raced to victory, and Buffalo Wild Wings turned the marketing opportunity into an extended promotion.

Challenge accepted. I’m a fan of your boneless wings! 200 will be a record for generations! https://t.co/2SzFmp7Uzz

— Joey Chestnut (@joeyjaws) July 7, 2024

Comparing visits during the seven-week period following the launch (May 12 to June 29) to the seven-week period prior to the launch (March 24 to May 11), according to data from Placer.ai, showed strong customer activity. Visits increased 8.1 percent immediately following the launch, largely due to disproportionate increases in visits on Monday and Wednesday of 45.6 percent and 49.3 percent, respectively. In addition, during the seven-week period following the LTO’s launch, Buffalo Wild Wings’ Monday visit share increased from 9.1 percent to 12.3 percent, while Wednesday visit share increased from 10.2 percent to 14.1 percent.

Chili’s is perhaps the most popular chain in recent months that has focused on value as much as Chili’s. On April 29, the company revamped its 3 for Me menu (a three-course meal at prices comparable to fast-food chains, it touts). Case in point: In May, the brand launched the Big Smasher, a half-pound burger with Thousand Island dressing, lettuce, cheese, pickles and red onions on a brioche bun—similar to McDonald’s Big Mac, of course. It was on the regular menu, but for a limited time it was available on the 3 for Me platform for $10.99. It came with chips and salsa, drinks and all-you-can-eat fries. That starting price of $10.99 hasn’t changed since 3 for Me launched in 2022. However, with this offer, customers had the option to order a classic margarita for $3.99, “an offer you certainly won’t find at any drive-thru,” the chain said at the time.

On a Monday during the launch, the 3 for Me Big Smasher was the No. 1 trending topic on X. The menu platform shuffled 16.1 percent in the third quarter, up from 15.5 percent. 47 percent of orders were in the $10.99 price range, while 53 percent were in the $14.99 to $16.99 price range.

According to Placer.ai, weekly visits to Chili’s have increased significantly year-over-year since the redesign on April 29. Even before that, Chili’s traffic was largely positive year-over-year, reaching 8.6 percent the week of April 1. But they have steadily increased since launch and have not yet stabilized.

According to Placer.ai, in addition to the Big Smasher Burger, the Chili’s Crispy Chicken sandwich, which was served alongside it, also seems to be causing excitement on the menu.

Placer.ai also analyzed some fast-food deals that have made headlines recently. McDonald’s $5 meal deal (McDouble or McChicken, 4 McNuggets, small fries, and a small drink) was announced on June 25. The Tuesday of the launch turned out to be McDonald’s busiest Tuesday so far this year (surpassed since July 2). There were 8 percent more visits than the average Tuesday year to date. Similar patterns have repeated since then.

Starbucks also introduced a limited-time Friday discount of 50 percent for app users (excluding hot brewed coffee and tea) on May 13. This lasted for the entire month. Placer.ai saw a significant increase in related traffic.

Compared to the annual average, visits to Starbucks on the following Fridays increased significantly. While visits to Starbucks on May 3 (before the promotion) were 1.1 percent lower than the annual average on Fridays, visits on May 10 (start of the promotion) were 20 percent higher than this number.