Increases in menu prices have led many diners to flock to fast food restaurants, as economic worries prompt customers to limit their non-essential spending.
However, fast food chains are already feeling the pinch of squeezed margins and face the tricky task of not upsetting the families that have historically supported them by raising prices too steeply.
This week, McDonald’s announced a bold move to double its value offerings, aiming to attract cost-conscious customers.
Actions from such industry giants may push their competitors to match these discounts, particularly on the same day, according to Mark Sasilefsky, TD Bank’s restaurant management and franchise finance director.
The “Golden Arches” are bringing back a meal option not seen since 2019, expanding their menu category.
The company will now offer eight meal deals available throughout breakfast, lunch, and dinner, each priced 15% lower than purchasing items individually.
Sasilefsky referred to this limited-time promotion as a “movement of power,” given McDonald’s substantial presence in the U.S.
He suggested that these deep discounts would pressure other brands to create similar promotions, but those rivals might struggle to outdo McDonald’s notable percentage reductions.
“When you consider the margins, a 15% discount is quite impressive,” Sasilefsky remarked.
“I think other chains have to respond, especially for breakfast. If you’re in that segment, you really need to offer discounts.”
This principle holds true at other times of the day as well. Still, Sasilefsky doesn’t believe McDonald’s discount strategy will spark a price war. Instead, he highlighted that brands typically attempt to match McDonald’s offers daily to attract as many visitors as possible.
Yet, McDonald’s primary intention isn’t to instigate a pricing battle. They aim to shift consumer habits, drawing a line between their loyal customers and competitors like Dunkin’.
“While they want to win over new customers, it’s really about influencing existing consumer behavior. Keeping current clients while drawing in those looking for value,” he added.
Essentially, it’s not just a short-term sales tactic; it’s about fostering long-term customer loyalty.
As the fast food industry navigates a challenging landscape, the focus remains on long-term viability.
Sasilefsky noted that the sector is grappling with various hurdles, including supply chain difficulties and the effects of rising labor costs, with only a few exceptions like Chipotle and Cava faring better.
As of July, menu prices at limited-service restaurants, including fast food, had seen a year-on-year increase of 3.3%, according to the National Restaurant Association. Interestingly, in April 2023, these prices peaked at 8.2%.
In the first quarter of 2025, McDonald’s reported decreased sales at U.S. outlets due to lackluster traffic among lower- and middle-income segments.
Starbucks is another chain that could feel the ripple effects of McDonald’s promotion, with first-quarter traffic still trailing compared to the previous year.
Additionally, Wendy’s faced reduced profits in their U.S. corporate-owned locations in the second financial quarter of this year, resulting from a combination of rising food and labor expenses and lower customer turnout.
This trend of cautious consumer spending might be more deep-rooted than temporary.
Will Auchincloss, of Ey-Parthenon’s Americas Retail Sector, mentioned that consumer research indicates Americans are adjusting their discretionary spending to cope with increased prices of essential goods and services, like food and housing. He noted that restaurant spending has taken the first hit across all income levels.
“Recent downturns in quick-service dining signal a reaction as nearly 40% of low-income households have already cut back. Price reductions in this sector could reflect wider changes within the industry,” he said, adding, “Brands are feeling the pressure from value-conscious consumers. As this trend grows, we could see a transformation in pricing strategies throughout the industry.”
