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After complaints about high prices, fast food chains are starting a “value menu” war. Will it last?

After complaints about high prices, fast food chains are starting a “value menu” war. Will it last?

A McDonald's sign

Customers have been trying to cut the rising cost of their menu items on fast-food chains’ apps, but the offerings are becoming fewer and fewer over time, social media users report. Above, a McDonald’s sign in Illinois in 2020. (Nam Y. Huh / Associated Press)

Millions of American families are hitting the road to start summer vacation, and ordering food on the go is part of the process. And it couldn’t come at a better time. Fast-food restaurants are in the midst of a cheap meal war, offering special deals to lure customers back to their restaurants despite inflation concerns and a minimum wage hike in California and other states.

Starting June 25, McDonald’s is offering a monthly discount that includes a combo meal – either a McChicken, a McDouble or four chicken nuggets, small portions of fries and a small drink – for $5.

Following McDonald’s announcement last month, other fast-food restaurants followed suit. Wendy’s announced its limited-time $3 breakfast combo menu and Burger King loudly announced the reintroduction of its $5 Your Way Meal.

In addition, fast food mobile apps continue to offer deep discounts.

App facilitation

Earlier this week, a Big Mac with medium fries and a medium drink at McDonald’s in Santa Ana cost $11.79 before tax. The same meal ordered through a mobile app and picked up at the same location cost $6.50 before tax – a savings of $5.29.

However, prices and offers may vary depending on the user.

Read more:The fast food industry claims that California’s minimum wage law is destroying jobs. Their numbers are fake

Diners are complaining about the McDonald’s app on Reddit. Some say the deals decrease with use. Others say their friends or partners have gotten better deals through the app than they have. Some mentioned they can find better deals if they just go to their local McDonald’s and order from there.

The multitude of special offers comes after restaurant guests sharply criticized fast-food companies on social media earlier this year for rising prices.

In response, Joe Erlinger, president of McDonald’s USA, said in an open letter last month that the average price of McDonald’s menu items has increased by an estimated 40% since 2019.

The exterior of a McDonald's branch at dusk.The exterior of a McDonald's branch at dusk.

The McDonald’s restaurant logo and golden arch shine in Chicago. McDonald’s plans to introduce a $5 meal deal in the U.S. in June 2024 to counter declining sales and customer frustration over high prices. (Jeff Roberson / Associated Press)

“Recently, we’ve seen viral social media posts and poorly researched reports that McDonald’s has raised prices well above the rate of inflation. This is inaccurate,” Erlinger wrote.

“The average price of a Big Mac in the U.S. was $4.39 in 2019,” he said. “Despite a global pandemic and historic increases in supply chain costs, wages and other inflationary pressures in the years that followed, the average price is now $5.29. That’s a 21 percent increase (not 100 percent),” according to unsubstantiated claims on social media.

Fast-food restaurants said the wage increases were a response to rising inflation and labor costs – partly due to increases in the minimum wage not only in California but across the country.

Read more:Your guide to the new $20-an-hour minimum wage for fast-food workers in California

While fast-food restaurants like McDonald’s are struggling with rising costs, they are by no means in trouble, says Shubhranshu Singh, an associate professor at Johns Hopkins University and a specialist in fast-food restaurant marketing.

“They don’t have any problems,” Singh said. “Inflation is rising. Wages are rising. But McDonald’s profits are rising too.”

McDonald’s global comparable sales rose nearly 2% in the first quarter of the year, according to the company’s latest statistics. The fast-food giant described this profit increase as “benefiting from average check growth driven by strategic menu price increases.”

Price-conscious restaurant patrons have noticed this and are fed up with the price hikes. They are eating less fast food and protesting on social media that their usual cheap meals are no longer affordable, Singh says.

Several diners took aim at McDonald’s and complained on TikTok that the company charges more for supposedly affordable food.

“This is $3 worth of food,” said a customer holding up a hash brown. “Something is wrong here.”

“McDonald’s has become too pretentious,” said another customer. “You shouldn’t be expensive.”

One guest called it “absurd” that she paid $4.59 for a medium portion of French fries.

And then there was the uproar over a McDonald’s in Connecticut charging $18 for a Big Mac meal. The photo sparked a national debate about rising fast-food prices.

Make choices

Most McDonald’s locations in the United States are independent franchises, so prices vary by location.

The increase in fast food prices ultimately resulted in sales at various fast-food restaurants such as McDonald’s, Starbucks and Pizza Hut being weaker than expected.

“Consumers are always making choices,” said Bank of America restaurant analyst Sara Senatore. “When the value proposition diminishes, consumers will make different choices.”

Until recently, consumers were willing to pay more for fast-food restaurants. When fast-food prices began to skyrocket in 2022, consumers simply went along with it because prices everywhere had risen due to inflation, Senatore said.

But inflation has since fallen, food prices have fallen and price-conscious consumers may no longer see fast food as the clearly affordable alternative, she said.

Enter the inexpensive meals.

People with red and yellow flags gather in front of Los Angeles City Hall.People with red and yellow flags gather in front of Los Angeles City Hall.

Fast food workers demonstrate in front of Los Angeles City Hall for a proposed minimum wage increase in 2022. The approved increase took effect on April 1 and was seen as a victory for unions. (Brian van der Brug / Los Angeles Times)

Cheap meals are nothing new. In the 1980s, McDonald’s, Wendy’s and Burger King launched a series of advertising campaigns known as the Burger Wars, competing for customers in the then-thriving fast-food market.

“The hope is that the consumer will go there and maybe buy something in addition to their low-price menu and then want to come back even if there is no offer,” Singh said.

But the promotions could not last forever, analysts warned.

“This is not sustainable,” Singh said. “I don’t expect any of these deals to last.”

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This story originally appeared in the Los Angeles Times.