Restaurant chains entered 2025 expecting smoother waters as inflation cools and the uncertainty of the election was in the rear-view mirror.
What they’ve instead found was even more choppiness and yet more uncertainty. The consumer was not quite as ready to start spending as many expected, and then talk of tariffs and trade wars dampened consumer sentiment and they started cutting back. All but a few restaurant chains reported weak sales.
Among restaurant chains that have reported earnings thus far, median same-store sales declined 1%, continuing a run of generalized sales weakness among publicly traded restaurant chains that began early last year.
In response, brands are intensifying a value push that began last year, offering even more aggressive deals and in some cases turning to familiar offers in a bid to lure customers to their doors.
Some are reconfiguring promotions to find something that works. Others are increasing marketing spending and many are looking for new menu items to get customers excited about coming back.
“When you’ve got an environment where there’s a pressured consumer, you’ve got to simply out-execute your competitors,” McDonald’s CEO Chris Kempczinski told analysts earlier this month.
Restaurant Business tracked earnings this quarter and used the financial services site AlphaSense to get an idea what restaurant operators are doing to combat the difficult environment.
“We are now operating in one of the most aggressive, value-driven environments we’ve seen in years.” -Denny’s CEO Kelli Valade
Value wars intensify
Restaurant chains appear to be intensifying a value war that began in the middle of last year when McDonald’s, which had been hammered on social media over its prices for months, kicked off a $5 Meal Deal.
“We are now operating in one of the most aggressive, value-driven environments we’ve seen in years,” Denny’s CEO Kelli Valade told analysts.
Denny’s is running with a buy one, get one deal that allows customers to buy a Grand Slam breakfast and get a second for $1. The diner chain already had a $2 $4 $6 $8 value menu, but felt it needed something even more compelling after traffic declined sharply to start the year. The BOGO helped improve Denny’s same-store sales to flat in April.
First Watch, which has resisted discounts and value meals, has nonetheless looked for ways to offer customers more value. It doubled the portion size of meat in its popular Tri-Fecta breakfast without raising prices, for instance, and has also empowered managers to “surprise and delight” customers by giving away the occasional juice or entree for free.
This has hurt the chain’s margins, especially as costs for things like bacon and avocados spike. But it has been effective at driving in more customers. In April, First Watch recorded its best same-store traffic result in more than two years.
McDonald’s started the year with a new value platform, called McValue, that combined a pair of national offers—a $5 Meal Deal and a Buy One, Add One for $1 promotion—along with digital and local discounts. But the company is reassessing the $1 offer, saying it didn’t do enough to drive “incremental” traffic to the chain.
“We feel really good about how the $5 Meal Deal is performing,” Kempczinski said. “When you look at the Buy One, Add One for $1, I’d say our view on that is it’s performing OK, but frankly it’s not driving nearly the amount that we’re seeing with the $5 Meal Deal.”
Burger King has been tweaking its value offers, shifting from $5 meals to $5 Duos, allowing customers to choose two items for $5, and $7 Trios, or three items for $7.
McDonald's McCrispy Strips will help the chain launch Snack Wraps this year. | Photo courtesy of McDonald's.
Resurrecting old ideas
Some restaurant chains are turning to old ideas to lure customers. Applebee’s has cycled through several traffic-driving tactics over the past year or so, such as $1 margaritas, 50-cent wings and $9.99 meal deals.
But after surveying customers, it’s now circling back to an offer that has been on its menu for more than 20 years: the 2 for $25, a two-person deal that includes two entrees, an appetizer or two side salads.
The chain believes 2 for $25 resonates the most with its customers, especially because it’s unique to Applebee’s.
“The fact that only Applebee’s does it is something that’s so important,” said John Peyton, Applebee’s president and CEO of parent company Dine Brands. “No one’s gonna confuse that with anybody else.”
Sweetgreen this year also brought back its seasonal menu cadence, which CEO Jonathan Neman said would help bring some mid-priced tiers to the menu, to drive frequency. The salad chain’s same-store sales fell 3.1% last quarter.
Just don’t call this a value offer.
“We would not present them as a value menu,” he said. “It would just be anchoring more of the menu in mid to lower price tiers.”
McDonald’s plans to bring back Snack Wraps later this year, using the chicken strips it just introduced to its permanent menu, called McCrispy Strips. The company informally announced the Snack Wrap’s return last year as sales fell following its E. coli outbreak out west.
BJ’s Restaurants, meanwhile, leaned heavily on its popular Pizookie dessert.
The giant ice-cream topped cookie is the star of its $13 Pizookie Meal Deal, which has helped drive traffic for two straight quarters.
And the dish also went viral on TikTok earlier this year after customers discovered the off-menu Pizookie Platter, a pizza-sized version of the dessert that combines four Pizookies in one.
BJ’s marketing team moved quickly to throw more fuel on the fire, and the chain went on to sell more than 24,000 Pizookie Platters, 17 times more than usual. Its traffic grew 2.7% in the first quarter.
“Value is important, and you have to deliver value worth paying for.” -Wendy's CEO Kirk Tanner
More marketing
One of the hallmarks of the early-year malaise was its breadth, as some chains that had previously not had sales challenges suddenly had them, notably the fast-casual burrito chain Chipotle, which reported its first same-store sales decline since the pandemic.
The Newport Beach, California-based chain typically has two big “tent pole” marketing events each year, in the spring and fall. This year, Chipotle CEO Scott Boatwright plans to add another limited-time offer in the summer, which could be a side item or dip, supported by advertising across digital channels to reach more consumer eyeballs. Boatwright did not reveal what is coming.
Wendy’s, whose same-store sales declined 2.8% last quarter, will spend much of the summer pushing a variety of new menu items, collaborations and value offers on its mobile app.
The effort, called 100 Days of Summer, is being done in response to changing consumer behavior, CEO Kirk Tanner said.
“You go after a highly seasonal time for customers and you deliver against what I think are critical checkmarks for the customer,” Tanner said. “Value is important, and you have to deliver value worth paying for.”
Sweetgreen's Ripple Fries drove sales in March. | Photo courtesy of Sweetgreen.
Menu innovation and operations
Restaurant chains released a record number of limited-time offers last year, and they don’t appear to be slowing down. Restaurant companies struggling with sales challenges frequently turn to new menu items to goose sales.
Shake Shack CEO Rob Lynch said a very limited promotion of a Dubai Chocolate Pistachio Shake in April at only 30 restaurants drew lines out the door, with units selling out in minutes. Coming this summer is a barbecue lineup with a Carolina option, along with an Oreo Cookie Funnel Cake Shake, a Banana Pudding Shake, and a Campfire S’mores Shake.
At Sweetgreen, new Ripple Fries rolled out in March and helped drive an increase in same-store sales initially. But the impact of tariff news on consumers in April quickly turned sales negative again—which is particularly surprising, given April is typically a booming month for Sweetgreen, as the weather turns warmer.
The chain is hoping to juice sales on May 13 with the launch of a limited-time offer in partnership with the high-end Cote Korean Steakhouse in New York, with three dishes that will bring Korean barbecue flavors to the menu for the first time. It also is expected to increase interest in the brand’s steak, which was added last year and has helped grow dinner sales.
Applebee’s in the first quarter added two new Cajun pasta dishes for $11.99 each to its Bourbon Street portion of the casual diner’s menu. They drove traffic and sales “in a way that we haven't in several quarters,” Peyton told analysts.
El Pollo Loco likewise had success with new menu items. It recently added a line of Mango Habanero Chicken Meals to its lineup, which brought in new customers and gave the company confidence to keep innovating. It is about to launch a new line of Fresca Wraps and Salads. And in June will introduce a new quesadilla combo at $9.99.
“We need to remind both new and lapsed customers that El Pollo Loco stands for quality and flavorful food that is quick, convenient and offers value for the money,” CEO Liz Williams said.
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