Fast-food chains like McDonald’s, Wendy’s, and others are heavily relying on value meal deals to navigate a challenging market. Despite a downturn in consumer spending affecting retailers broadly, Restaurant Brands International Inc. (RBI), which owns Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs, managed to increase its profit in the latest quarter.
Joshua Kobza, CEO of RBI, acknowledged that the consumer environment has been tough. “There’s no denying that the environment has been challenging,” he told analysts during a Thursday earnings call.
This sentiment is widespread across the fast-food industry. McDonald’s, for example, has recognized the impact of high interest and mortgage rates on consumer behavior, with CFO Ian Borden noting a shift to a “street-fighting mentality” to remain competitive, as stated in an April 30 earnings call. Last week, McDonald’s experienced its first decline in same-store sales since 2020.
To combat the competitive pressure, RBI’s brands, along with McDonald’s, Wendy’s, and other fast-food chains, have focused on value promotions. This summer has been marked by what media outlets are calling the “value meal wars.” For instance, Tim Hortons in Canada has been promoting $3 breakfast sandwiches with a coffee purchase—a deal Kobza mentioned he took advantage of on Thursday. Similarly, Burger King has been highlighting its $5 “Your Way” meals.
“We’ve been really disciplined with our everyday pricing, which has been yielding positive results,” Kobza said.
Competitors are employing similar strategies. Wendy’s in Canada has been offering two breakfast combos for $4, while Starbucks has been providing a 25% discount on iced drinks on Fridays throughout the summer. McDonald’s has also adjusted its pricing, lowering coffee prices to $1 and offering ice cream cones at the same price.
Regarding its pricing strategy and competition, Kobza remarked, “Tim’s is doing an excellent job outperforming the market, even amidst these difficult conditions.” He noted that while inflation has eased in Canada, unemployment remains higher compared to the U.S.
Tim Hortons has maintained a strong position due to its dominant share of Canada’s brewed coffee and breakfast sandwich market. The chain has been working to extend this lead by launching flatbread pizzas nationwide and introducing new wraps, bowls, and sparkling fruit drinks, aiming to capture more sales throughout the day.
For More Details: https://insightssuccess.com/
