GLOBAL- In its most recent report, capital markets service provider Nasdaq has revealed most of the largest QSR chains are extending their US$5 value deals in a move meant to attract customers amid a challenging market environment.
In the past few years, high inflation significantly increased the cost of raw materials and key ingredients for QSR chains. This cost pressure was transferred to customers through higher prices.
The report reveals that the cost of eating at QSR restaurants has increased by 4% in the past year and has increased by 25% since August 2020.
These higher prices have scared away customers since high inflation has significantly reduced households’ disposable income. Demand has significantly dwindled as more customers prefer the cheaper alternative of eating at home.
This dual pressure has created a tough business environment for QSR chains that depend on the patronage of low-income customers.
The US$5 value meal trend started in May when McDonald’s announced a four-item combo meal meant to appeal to customers. The combo meal includes nuggets, a sandwich, fries and a preferred soft drink.
Other fast food chains competed with McDonald’s for the dwindling customer base with value deals of their own. Burger King, Wendy’s and Jack in the Box are all running US$5 value deals of their own.
Although meant to be a limited-time offer, the challenging market environment continues to pile pressure on chains, causing many QSR chains to either enter the value deal battle or extend existing value deals.
Last week, McDonald’s announced it will continue offering its value deal until December.
In August, Burger King extended its US$5 Your Way Meal till the end of October.
Wendy’s recently expanded its value deal to include a US$1 sandwich, a move the report describes as a signal the fast food chain will not relent on its value deal.
Popeyes is the latest QSR chain to enter the value deal battle. The chain has introduced a new deal that serves up to three pieces of fried chicken for US$5.
Nasdaq reveals the greatest beneficiaries of the value deal trend are customers.
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