Now they're turning to price to win back customers. Starting today, McDonald's will offer a 99-cent menu, containing two sandwiches and a variety of side items and desserts, at all of its U.S. locations. Atlanta McDonald's outlets started carrying the 'value menu' this summer, as a test market. Burger King introduced its 11-item 99-cent menu last month, offering hamburgers, tacos, chili and several side dishes.
In turning to full-time price cuts rather than occasional discounts, the two chains are adopting a longstanding practice at competitors Wendy's and Taco Bell, which offer both promotional and full-price items all the time.
Will consumers bite?
Over the past nine weeks, Americans have cut back on visits to restaurants because of the weak economy, says Harry Balzer, a vice president with the market research firm NPD Group. Reducing prices is the quickest way to change that behavior, he says.
The average cost of preparing a meal at home is $ 1.96, Balzer says, making it tempting to turn the cooking over to someone else for just a few pennies more for a burger and fries or a baked potato and chili.
Already, about 30 percent of customers at McDonald's buy based on price, says J.M. Owens, who owns 12 restaurants in Cobb and Cherokee counties. At Burger King, from 20 percent to 30 percent of customers do, says spokeswoman Kim Miller. 'We want to give them a reason to visit us more frequently', she says.
Picking up customers by dropping prices may backfire, though, says Bob Goldin, executive vice president of Technomic, a Chicago-based restaurant consultant group. 'You're buying business. You're not earning it that way', Goldin says. 'It's a Band-Aid.'
People who have deserted fast-food chains for more upscale, quick-casual restaurants such as Panera Bread, Goldin says, aren't likely to become regulars again based on price alone.
McDonald's and Burger King are trying a variety of strategies besides cutting prices. McDonald's has added healthier choices such as a fruit-and-yogurt parfait to its menu and plans to add others over the next year. It also plans a $ 1 billion renovation program. Burger King remade its menu this year, introducing more than a dozen new sandwiches and side items, including a vegetable burger. A couple of those sandwiches, such as the home-style BK Griller burger, have already fallen by the wayside.
But the new value menus are drawing interest. Pat Havens of Clarkston dropped into McDonald's for lunch this week, picking up a McChicken sandwich and fries from the 99-cent menu. It was fast and cheap, she said, if not as varied as Burger King's discount menu.
Havens and co-worker Sherika Wiley of Decatur had checked out Burger King's value menu first, but something more compelling than taste sent them down the street to the Golden Arches: The line was too long.
