Eat Fast, Think Fresh

Posted by Milos Sugovic

Are fast food chains forgetting that their niche can go beyond price?

Recession-busting meal deals are the new fad as fast food restaurants are shifting focus away from competitors to the common nemesis - the recession. Price is becoming the rule of the game, but positioning fast food meals as an integral component of the recession diet has inherent pitfalls. 

Nowadays, gas and lattes are luxuries, and fast food is trying to avoid following suit. With its 444 Deal, Domino’s offers three ten-inch pizzas for $4 each. Subway and Quiznos have elevated the rivalry to the $5 sandwich battleground. McDonald’s, KFC and Taco Bell have hosted national freebie events and revamped their value meals to attract the income-hungry consumer. 

So why are so many trying to tap into the limited haul of the recession-marketing bandwagon instead of creating a comparative advantage?

Marginal price cuts will attract consumers but not to the extent hoped for. First off, relative cross-chain meal prices remain constant as virtually every fast food restaurant has a recession special on the menu. So we’re unlikely to see an increase in sales for any particular chain vis-à-vis competitors due to price-based consumer switching. More importantly, home cooked meals and brown bag lunches are hurting the industry as Americans are resorting to lunchanomics. 

So how are these giants to win back consumers that have once helped maintain the obesity trend?

Their PR and advertising campaigns need to go beyond dollars. Look at Subway’s success and the strategies employed. Carving out a large chunk of the dietary market comes with convenience and calorie undercutting in tandem with price. Perhaps Taco Bell and KFC should look to Subway for some ideas to think fresh.

Comments

[Sam Ford]

Good post, Milos. Perhaps restaurants that are dirt cheap, like a certain hot dog and papaya stand here in NYC, can really market recession specials, but the other companies need to find a greater differentiator than that…Plus, that’s the problem in the restaurant business, is that companies spend more time copycatting than differentiating.