LOS ANGELES (Reuters) - Cheap fast-food “dollar” deals surged in the United States during the first quarter, marking a major shift in strategy as a cool-down in consumer spending sent restaurant chains scrambling for customers.
So-called “value” offers have been part of the U.S. fast-food landscape since 2002, when McDonald’s Corp (MCD.N) debuted its popular Dollar Menu and gave the industry a reliable recipe for driving traffic.
McDonald’s and other major chains deemphasized such deals in recent years, choosing instead to invest in food quality improvements to bolster competitiveness with more upscale brands like Chipotle Mexican Grill Inc (CMG.N) and Chick-fil-A.
Dollar deals roared back in the first three months of this year, when economists estimate consumer spending growth braked to below a 1.5 percent rate. That would be the slowest pace in nearly five years and follows the prior quarter’s robust 4 percent growth rate.
Value menu traffic was up 10 percent for the first three months of 2018, while value menu sales chalked up a 13 percent gain, NPD Group analyst Bonnie Riggs told Reuters.
The results lifted value menu traffic 1 percent for the fiscal year ended March 2018, reversing three consecutive years of declines, according to NPD.
“It’s clear that major restaurant chain operators are pulling out all of the stops to get consumers to visit this year,” said Riggs, author of a new report titled “Value Wars 2.0: The Value Menu Strikes Back.”
Restaurants across the spectrum have been battling for a bigger slice of a pie that is not growing. Total U.S. restaurant traffic was flat in calendar 2017.
Yum Brand Inc’s (YUM.N)
