For McDonald's and rivals, cheap deals no longer do the trick
For McDonald's and rivals, cheap deals no longer do the trick
By Savyata Mishra and Waylon Cunningham Tue, August 11, 2026 at 10:50 AM UTC
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By Savyata Mishra and Waylon Cunningham
Aug 11 (Reuters) - U.S. fast-food chains including McDonald's that spent the second quarter battling to pull in price-conscious diners discovered discounts alone were no longer enough to keep them coming back.
Value meals and promotions have been the industry's most reliable traffic driver for the past two years as consumers squeezed by inflation sought cheaper meals. But results showed the strongest performers paired bargains with menu innovation, quality improvements and a smoother customer experience.
The approach helped chains such as Yum Brands' Taco Bell attract budget-conscious consumers without resorting to blanket discounting across their menus. Its $5, $7 and $9 meal boxes were a hit with customers, while the chain kept introducing new menu items that encouraged spending beyond the entry-level deal.
Value succeeds when it is "really clear and simple" and does not feel like a "bait-and-switch", said Rachel Royster, director of strategic planning and innovation at Connections, a foodservice consultancy.
Taco Bell reported a 7% rise in same-store sales during the quarter, while global comparable sales at McDonald's rose 1.3%.
McDonald's struggled despite its under-$3 menu and a $4 breakfast meal. CEO Chris Kempczinski said loyal customers accounted for about two-thirds of the traffic shortfall and blamed execution rather than strategy.
Other chains found that promotions did little to offset pressure on lower-income consumers.
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Wendy's, whose Biggie Bag value meals start at $5, reported a 7% drop in U.S. same-restaurant sales and withdrew its annual forecast, while Wingstop posted a 7.5% decline in U.S. same-store sales despite promotions including $1 chicken wings.
Wingstop CEO Michael Skipworth said its sales sagged in urban areas, where households typically faced more financial pressure, even as visits climbed as much as 9% in higher-income markets. Wingstop's stock has lost more than three quarters of its value in the past six months.
"While increased noise created by competing promotions may have made it harder for consumers to make that determination, they appear to have also become more sophisticated in how they evaluate the various tradeoffs and cut through the noise," said Matt Curtis, analyst at D.A. Davidson.
The quarter also showed that restaurants do not have to be the cheapest option to succeed.
Restaurant Brands' Burger King was among the clearest winners. Executives credited promotions including its "2 for $5" and "3 for $7" offers, alongside broader efforts to improve operations and menu quality, for strong U.S. sales growth.
Burger King is "doing discounts but not all the time, and when they do, they make it creative," said independent restaurant consultant John Gordon. "They're not doing this insane, everyday, deep discounting."
Domino's Pizza also benefited from value-focused offerings and loyalty initiatives that helped drive traffic and support sales. Chipotle delivered strong results while limiting price increases to about 1% to 2%.
"Value isn't just about discounting and price point. It's about convenience. It's about execution. It's about menu innovation," Chipotle CEO Scott Boatwright said.
(Reporting by Savyata Mishra and Neil J Kanatt in Bengaluru and Waylon Cunningham in New York; Editing by Devika Syamnath)
Source: “AOL Money”
