The fast-food wars are heating up as the giants in the industry are launching new low cost menu items. On Thursday, McDonald’s will roll out its new Dollar Menu, while Taco Bell has countered that by announcing Wednesday it would add a new item to its menu beginning January 25. The new item will be Nacho Fries at the price of $1.00.
Taco Bell, part of the Yum Brands Inc. lineup that includes KFC and Pizza Hut, also announced that the fries would be just one of 20 new items for $1.00 the chain is preparing to unveil in 2018. That it is over and above the 20 “mainstay” products for $1.00 it sells already including certain burritos and tacos.
Wendy’s Co. has also jumped into the low-priced fray, announcing on Wednesday it expanded it “4 for $4.00” menu to now include eight choices of entrees, including burgers and chicken sandwiches. All of the entrees will have chicken nuggets, small French fries and a fountain drink for the price of $4.00.
This week, Jack in the Box, promoted its new “Value Done Jack’s Way,” that has items priced between $1.00 and $5.00.
Each of these moves made by the fast food companies have a goal of adding market share, which means taking it away from their rivals, or at the least, protecting what share of the market they already have. The value offerings are also used to help boost sales.
Even if little profit is made by the chains from their lineup of inexpensive menu items, it is about getting more customers into their restaurants, says a market analyst in California. The important thing at this point is market share, he added.
Another aim the fast food chains have is that once a customer enters the store, they are apt to buy more items that are higher priced and have better profit margins. Many customers enter with the idea of buying a burger for $1.00 but leave with a side dish and drink.
Where McDonald’s is concerned, its new value menu is necessary to reverse the declines in customer traffic at its restaurants across the U.S. that its suffered the past few years, since it moved away from the original Dollar Menu it offered, say analysts.
Nonetheless, McDonald’s is prospering. Its same-store sales in the U.S. rose by 4.1% during its 2017 third quarter compared to the same period the previous year, and its stock was up 44% in 2017.