The value wars are apparently being fought to a standstill, at least as far as the fast-food customer is concerned.
While data from various sources suggest that customers are ordering some of the value deals that quick-service restaurant chains have been offering this summer, there is little real evidence to suggest that they’ve brought customers back, at least broadly.
According to Black Box Intelligence, same-store traffic at quick-service restaurants declined 2.2% in June, 3.4% in July and 4% in August before improving moderately in September, to a 2.5% decline. Same-store sales over that period declined in both July and August and were up 0.8% in September, according to the data firm.
Other data suggest similar results. Quick-service traffic declined 1.2% in the third quarter, according to Revenue Management Solutions (RMS), a slight deceleration from the second quarter.
The data is broad and may not take into account what specific chains might be doing. Indeed, earlier data from Placer.ai, backed up by some franchisees, that McDonald’s $5 Meal Deal helped generate some traffic growth, at least initially.
There are also some indications that what consumers consider to be “value” may be different from simply price.
According to Black Box, the chains with the top third of value scores had higher check averages, in general. The firm believes that customers might be getting adding other items to their value offerings, which could be generating higher average checks for those chains.
But customers are also flocking to restaurants that serve larger portion sizes. Those companies with the best traffic, according to Black Box, had 21% higher scores in portion. Customers appear to be rewarding brands that have better deals on offerings with larger portion sizes, according to the data firm.
Data from M Science, meanwhile, suggests that McDonald's $5 Meal Deal generated strong customer interest and higher average checks. Burger King's $5 Your Way Meal generated more new customers, however.
Interestingly, however, while value appears to be failing to generate traffic, consumers are far more likely to order delivery.
Delivery traffic at fast-food restaurants increased 14.7% in the third quarter, more than any other service mode. Interestingly, traffic in the drive-thru was down 10.2%.
Several restaurant chains have been pushing discounts over the past few months as consumers, frustrated by rising menu prices, have cut back on dining. Lower-income consumers in particular have cut back.
Restaurant chains initially introduced value offers for a limited time, but many brands have extended those offers, including McDonald’s. Subway, which has been heavily advertising deals on its app, is also planning to keep pushing value for the balance of the year, several sources say.
Not everybody is on board, however. Starbucks, facing major traffic and sales challenges all year, is walking back some of the discounting it had been doing this year.
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