McDonald's And Wendy's In Pricing Battle
While QSRs fighting for the business of cash-strapped consumers -- who are frequent QSR users, albeit cautious spenders -- is hardly news at this point, the battle between McDonald's and Wendy's on this front has become increasingly intense, reports The Wall Street Journal.
McDonald's' moves in recent times to beef up its Value Menu in the U.S. appears to be working: Its U.S. same-store sales rose 0.7% in April (whereas its same-store sales last month in the European and Middle East Africa regions, where improved value menus haven't yet kicked in, declined).
However, McD's acknowledged that its weak earnings growth for Q1 reflected the need to sacrifice profit margins by focusing on the value menus.
Meanwhile, in response to the pressure from McDonald's, in particular, Wendy's earlier this year launched a new "Right Price, Right Size" value menu offering a variety of items priced between $1 and $2.
That helped its sales and margin in the first quarter: Its North American same-store sales rose 1% at company-owned units and 06% at franchise restaurants.
But Wendy's told WSJ that it still isn't attracting as many value-oriented consumers as it would like.
So going forward, it's going to take a "sharper-edge approach" in promoting its 99-cent items, in particular.
"We are refining our promotional calendar for the rest of this year…with modestly more emphasis on price-value," said Wendy's CEO Emil Brolick.