Rocco Delorenzo on How Restaurant Chains are Competing in the 2024 Value Wars

As inflation rises, consumers demand less expensive dining options, especially in the fast food sector. Cost-conscious consumers are driving an industry-wide value war, as fast food is quickly becoming a luxury, and Americans continue to assess their spending habits. Many families prefer to cook at home more and skip the weekly casual dining or fast food pickups and home deliveries.

Rocco DeLorenzo, a graduate of Cornell University’s College of Agriculture and Life Sciences, is examining the current changes in consumer sentiment towards fast food outlets. Public opinion and outcry have been overwhelming.  The high prices at fast food chains have been made more evident by TikTokers and YouTubers openly commenting on the outrageous prices they’ve paid for a sack of burgers and fries.

DeLorenzo, who completed dual majors, one of which is Food Science with a concentration in Business, has witnessed firsthand the rise in fast food prices! Nearly all the major chains have also noticed the sudden decrease in foot traffic nationwide. Now, an industry-wide value war is taking place. However, Rocco is unsure that the competition between food chains has resulted in higher sales.

Fast Food Chains Offer Value Pricing

The current fast food value war was started in early 2024 by the largest chains in America. McDonald’s, Burger King, Taco Bell, Sonic, and other fast-food chains brought back popular value menus, most with prices at or below five dollars for an entire meal!  The goal was to attract low-income customers and bring back those who had returned to eating at home, refusing to pay ten dollars or more for a burger, fries, and drink.

Delorenzo sees another competitive factor for fast food chains in this value war. The local grocery stores and big-box food sellers are also trying hard to compete with restaurants. You also have to factor in the competition with high-end fast-food chains. After all, if you pay higher prices for a meal, you may choose a meal from Chick-fil-A or Chipotle.

Another way to defeat the competition in the tight fast-food industry is to launch strategic menu campaigns that bring back popular favorites. This was successful for McDonald’s when they bought back the Grimace Shake and Wendy’s with their Pretzel Bacon Pub Burger. This is also why Starbucks continues to resurrect its holiday-inspired coffees, which consumers are willing to pay for even with their premium price point.

The Impact on Foot Traffic and Sales

Rocco Delorenzo has studied the data through 2024 reported by the leading fast food chains. The impact of the value war has been mixed. For example, McDonald’s $5 Meal Deal has led to slightly positive sales and attracted some lower-income customers. Still, according to industry analysis, it hasn’t resulted in a significant increase in foot traffic.

As a result, what was to be a temporary return to the value menu offerings has been extended, with operators in about 55 U.S. regions planning to continue their low-priced deals into August and September.

While the fast food value wars may have shifted consumer perception away from the higher prices, driving them back to the major chains in record numbers, the long-term impact on profitability is still uncertain.