Ron Shaich, the former CEO of Panera Bread, said on CNBC last month that fast-food chains are in a “tough spot” if all they have to compete on is price.
He’s not wrong, and we’re about to find out if some of the most well-known chains in the U.S. can indeed compete on something that isn’t value.
Each of the three main fast-food burger chains, McDonald’s, Wendy’s and Burger King, are kicking off major marketing campaigns all at the same time.
Wendy’s this week will start selling a menu developed around the Nickelodeon program SpongeBob SquarePants called a Krabby Patty Kollab, featuring a new version of its Frosty and its take on the Krabby Patty from the program.
McDonald’s on Thursday will start selling the Chicken Big Mac in the U.S., probably the biggest limited-time offer at the chain in years.
And Burger King has a Million Dollar Whopper contest featuring three, customer-invented versions of its Whopper—Fried Pickle, Bourbon BBQ and Mexican Street Corn. The restaurants will serve all three later this fall and the inventor of the winning burger will get $1 million.
Each of the strategies are designed at least in part for a digital audience, as social media has become a crucial part of companies’ connection with consumers. They also come at an important time for the sector as it seeks to get traffic in the door without resorting to price.
Value remains a key element in quick-service marketing right now. Most major fast-food chains, including those three, have some form of value offer they’re pushing on customers right now. In recent weeks, for instance, Sonic revamped its $1.99 value menu and Taco John’s introduced new Fiesta Softshell Tacos at a 2-for-$5 price point.
There is little question to me that some kind of value is necessary in the restaurant business. At the very least, the value is needed to quiet concerns about the state of restaurant pricing. As my colleague Joe Guszkowski pointed out recently, consumers now believe casual-dining chains are a better value than fast food.
We might remind folks that casual-dining chains typically provide a service in which most of the transactions involve a tip that adds another 20% to the bill. That consumers now believe these restaurants to be a better value than the low-priced fare offered at fast-food chains is a sign of just how much the ground has shifted in the restaurant business these days.
At the same time, as Shaich noted, value can’t be the sole reason consumers visit your restaurant chain.
The best way for chains to win in an environment like this is to get consumers excited about coming in, for one reason or another.
The marketing strategies could help these brands get customers who are less concerned about price. If they work, they could also generate positive buzz for the brands, something that has been lacking in recent months.
At the very least, it should make for a more fun environment for the chains’ operators than one in which the brands are racing to the bottom on price.