Fast-Food Restaurants Continue Price Wars

The urgency for discounts has grown as fast-food sales have slowed and casual dining establishments have gained market share with their own value offers.

According to CNBC, soaring menu prices have deterred many fast-food patrons, “including those in the low-income bracket who make up a sizable chunk of the sector’s customer base.”

McDonald’s is extending its $5 Meal Deal, initially set for one month, to nearly all U.S. locations through August due to strong customer response and rising food costs. The deal includes a choice of a McDouble or McChicken, small fries, four-piece Chicken McNuggets, and a small drink. The promotion has seen mixed results in drawing customers back and may be extended further if it drives sales amid tough economic conditions.

The deal, launched on June 25, was designed to offer value at a competitive price. In addition to the national deal, local franchises are running region-specific offers, such as a $3.50 Double Cheeseburger in Columbus or a $1 breakfast sandwich in Memphis, to cater to local tastes and provide extra value.

Despite some positive results, experts note that the deal has had mixed effectiveness across regions and has not yet achieved the widespread impact McDonald’s may have anticipated.

The dining-out landscape is shifting as fast food is no longer the automatic choice for budget-conscious diners. In cities like New York, the cost of fast-food meals has risen significantly, with items like a McDonald’s Big Mac meal or a Burger King Whopper combo approaching $14. In response, chain restaurants are introducing attractive promotions to draw in customers. For instance, Chili’s offers its “3 for Me” combo — a meal including an entrée, side, appetizer, and drink — for $10.99, providing a higher-quality alternative to fast food at comparable prices.

Restaurants like Applebee’s, Red Lobster, and Outback Steakhouse are also rolling out value-driven meal deals to compete with rising fast-food prices. These chains are carefully adjusting their pricing to balance customer retention with profitability. However, the long-term viability of such discount deals is uncertain. Red Lobster, for example, faced significant financial losses due to its previously popular endless shrimp deal, prompting a price increase from $20 to $25.