I’m really not a fan of fast food. In
fact, it’s extremely rare for me to ever visit a fast food restaurant or buy a
takeaway meal. The only time I would ever go into a McDonalds or Burger King
would be to use their toilets or (if I’m really desperate) to eat one of their
vegetarian burgers while on holiday. And even then, I’d only buy food at one of
these burger joints if there were no other eating options nearby.
But if you happen to be the type of
person that likes fast food, then you might have noticed something strange
happening recently.
It appears that many fast-food outlets
are falling over themselves to offer discounts and promotions to their
customers, such as low-price breakfasts at McDonald’s and Greggs - plus lunch
offers at Kentucky Fried Chicken and Domino’s Pizzas.
So why the sudden increase in special
offers?
Recently, customers have become
more careful with money and are not visiting these restaurants as much. So the fast food chains want to tempt them back. According to data
from Meaningful Vision the number of promotions at fast-food restaurants,
bakeries and coffee shops from April to June this year, increased by a third
from the same period last year.
According to the Meaningful Vision Chief
Executive Maria Vanifatova: “The use of promotions is growing as a key tool to
generate additional traffic, which has not been growing.”
Fast-food operators, like most other
businesses, put their prices up sharply during the cost-of-living crisis. But
prices of fast food increased slightly more on average than prices in grocery
chains.
According to Siobhan Gehin, a former
executive at KFC: “This unprecedented speed of change has not really given
businesses or consumers time to get used to the new price levels.” Gehin believes that this is making customers
either trade down to cheaper menu items, or eat at home instead.
Pub Meal v Meal Deal
McDonald’s saw its first fall in sales
since the pandemic in the second quarter of this year, forcing the company into
a “comprehensive rethink” of pricing.
Independent retail expert Clare Bailey
says that: “It used to be quite good value, but is now seen as quite expensive.”
She suggests you can have a sit-down plated meal in a pub for only slightly
more than a meal deal from a fast-food chain.
But there are reasons the sector has had
to put prices up. For example, high energy costs, increased packaging costs,
the increase in the minimum wage for staff, and in McDonald’s case, the
commitment to locally source its beef.
Alistair Macrow, Chief Executive of McDonalds UK and Ireland, says that people face difficult decisions about
where and when they spend their money and that value is “more important
than ever”. He says that his company listens to customer feedback when it
comes to considering what offers to run.
“Our ‘3 for £3 deal’ first ran at the end of the month, when our customers told us they needed help the most, and across school half-terms, allowing more families to come together for a meal out. We heard it worked, so we have just brought it back to coincide with school summer holidays.”
He added that McDonalds introduced a
breakfast deal in the spring - which brought it into direct competition with
Greggs - because "customers told us they need to prioritise value at
breakfast". That deal has also been brought back for a limited period.
Maria Vanifatova says lunches have become
particularly competitive. For example, KFC launched a £5.49 lunch deal in
March, which includes a fried chicken wrap, side dish and drink. A month later,
Domino’s revealed its lunchtime £4 ‘Cheeky Little Pizza’. Pizza Hut and TGI
Friday’s have also recently started making similar offers.
Health Concerns
However, while the chains say they are seeking to offer better value for money to their customers, Katherine Jenner, director of the Obesity Health Alliance is cynical and worries about the health impact. According to her: “Multi-buy offers are not designed to save people money - companies are not doing them to be nice. They are a marketing tactic designed to get people to buy things they weren't otherwise going to.”
Jenner says the portion sizes in fast-food restaurants are much larger than you would make at home, and there is also more sugar, salt and fat. “You can't even make informed decisions about what you’re buying as the information isn’t easily available.”
How long will these promotions last?
Siobhan Gehin says: “I would expect
discounting to continue for at least the rest of this year, but to gradually
ease off as consumer sentiment continues to improve and as interest rates
ease.”
But Clare Bailey disagrees: “Once consumers come to expect discounts and vouchers and so on, it’s hard to take it away because a lot of shoppers will come to rely on it.”
But one trend that looks like it’s
here to stay is that of offering deals via apps. ‘McDonald’s Mondays’ and ‘Burger
King’s Whopper Wednesdays’ are both examples of app-based promotions. KFC and
Subway also offer new deals every few weeks for their app customers.
According to Darren Bugg, Editor of The Customer Service Blog: “It seems that fast food restaurants will continue to offer deals and discounts for the foreseeable future, just to get people through the door.”
“But in the long term, there is no
point in selling food unless it makes a good profit. So this will create a ‘Catch 22’ situation for some fast food chains. It wouldn’t surprise me if some of the
less profitable outlets close down altogether over the next few years. And with
less competition, the more popular outlets will then have more scope to charge
standard prices, without offering discounts.”
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