Restaurant chain sales took a hit in the back half of September, as Domino’s executives suggested recently. The likely culprit, as my colleague Lisa Jennings wrote, was the government shutdown.
But as we’ve written before, it continues what has been one of the toughest years on record for much of the industry. And that tough year has come after what was a rather substandard 2024, which followed a weakening 2023.
And all that happened even as restaurants threw more at their customers than at any time in history.
My Technomic colleague Robert Byrne noted at the recent CREATE Conference that limited-time offers are on pace to exceed 40,000 this year. “This is huge,” he said. “You’re constantly giving your guests a new reason to return. You’re giving yourself rationale for new promotions.”
Meanwhile, restaurants are offering more discounts than ever, too. Nearly three out of 10 restaurant visits are on a discount, the highest number in decades, if not ever. Those discounts are coming on the mobile app, on aggregator sites, in large-scale offers and even the occasional paper coupon.
McDonald’s even just lowered prices on its combo meals, bringing back its Extra Value Meals. And yet there are so many deals out there that it hasn’t quite had the impact I certainly would have expected by this point.
The question ultimately is whether more is necessarily better. Because these efforts certainly don’t appear to be generating the kind of traffic many operators would expect from the number of limited-time offers and discounts they’re putting on their menu boards.
The lack of impact should pressure operators to think differently about the way it brings either new menu items or new value offers to the market. Because much of this marketing is often a form of group-think. Brands and marketing teams eager to do something to resonate with consumers often jump on bandwagons or trends.
Consider the limited-time offers. Brands see trends pop up on social media and everybody rushes in to get a piece of the perceived action.
The result is we get loads of Dubai Chocolate versions of everything or spicy chicken sandwiches or eight different versions of a snackable chicken wrap, probably with a ranch and a spicy version or if someone is feeling crazy, barbecue.
But there is a penalty to be paid by this kind of bandwagon jumping. For many restaurant teams, those wraps are painful to prepare. When we tried a bunch of wraps over the summer, many were put together poorly. In one instance the visit took longer than expected and the wrap looked as if all the ingredients had been thrown on the wrap and then bunched in the wrapping and tossed in a bag.
In that sense, marketing teams are gumming up operations in a bid to jump on a temporary fad. They do themselves a disservice in the long-term for an uncertain, short-term fix of a few social media-driven visits.
The discounts, too, come with a price. At this point, there are so many offers out there that the consumer has “deal fatigue.” They’re not actually visiting more often. They’re just buying cheaper items when they do. And that has its own set of problems, especially for a business that relies heavily on franchisees to run restaurants.
It is true that consumers need some form of value after years of inflation. And as Byrne pointed out, the consumer expects some form of innovation from their restaurant chain. So in some respects, much of this is just the cost of doing business. Operators have to do these things, because otherwise they may lose traffic.
But maybe that’s the problem. By believing they have to do all these things, companies are risking profitability and operations for an idea that has no real payoff except to maybe not lose a customer. And that might be the worst type of marketing.