The Value Obsession: How Restaurant CEOs Are Prioritizing Value to Boost Sales and Attract Customers

Restaurant CEOs are emphasizing the importance of “value” as they discuss their plans to boost sales and bring back customers. This focus on value comes as prices for food away from home have risen significantly, leading to a decline in restaurant traffic and sales. Many restaurant chains are hoping to attract customers through discounts and promotions, such as the $5 meal deals offered by McDonald’s, Burger King, and Taco Bell. However, some chains, like McDonald’s, have acknowledged that their reputation for value has suffered recently. In response, they are taking steps to improve their value proposition and regain their leadership position in the industry.

Chipotle Mexican Grill, on the other hand, has seen strong same-store sales growth and increasing traffic, but they are still prioritizing value. The company has faced criticism from customers who claim that the portions have been shrinking, so they are focusing on reemphasizing generous portions to maintain their reputation for value.

It’s not just fast-food chains that are concerned about value. Dine Brands, the parent company of Applebee’s and IHOP, has seen low-income consumers reduce their spending. Customers who make less than $75,000 annually are not visiting their restaurants as frequently, and when they do, they stick to the value menu. This has resulted in surprise same-store sales declines for both Applebee’s and IHOP.

The emphasis on value is not only about pleasing customers but also about shareholder value. Restaurant stocks have been under pressure this year, and investors are worried about the financial health of the industry. While cheap deals may attract customers, they can also hurt profitability and franchisees’ financial health. The fear of a value war, where chains compete to offer the best deals, further exacerbates these concerns.

However, so far, the focus on value seems to be bringing some customers back. Burger King’s $5 value meal has attracted customers, and the company plans to continue offering it through October. Despite rivals offering their own $5 discount deals, Burger King has not seen a significant impact on its business. In fact, Restaurant Brands International believes that the industry-wide focus on value can improve the value-for-money perception and benefit everyone in the sector.

Overall, the emphasis on value reflects the current economic climate, where consumers are more deliberate in managing their spending and are seeking brands that offer compelling value. Restaurant chains are recognizing the need to provide discounts and promotions to win back customers and improve their financial performance. However, they must also balance these efforts with maintaining profitability and the long-term health of their businesses.