Friday, May 25, 2018
Business

Fast-food chains are phasing out dollar menus

Craving a burger off a fast-food dollar menu? Chances are that it now costs more than a buck.

Customers are still reeling from McDonald's move last month to update its Dollar Menu, which for more than a decade offered burgers, fries and other items $1 apiece or less. The menu accounts for as much as 14 percent of the chain's overall U.S. sales.

But soon, the list will morph into what's being called the Dollar Menu & More, which mixes the standard $1 items in with $2 goods and $5 shareable family meals designed to, as McDonald's puts it, "fill the need for choice, flexibility and other preferences."

The fast-food behemoth isn't the only one ditching the traditional dollar deal.

Rising costs and changing tastes are pushing prices past the buck barrier. In a quick-service market overrun with more upscale outlets and foodies seeking premium ingredients, the dollar deal may be doomed.

In January, Wendy's 99-cent bargain menu transformed into Right Price Right Size and includes items that cost as much as $2. At Burger King, the changing value menu recently included a limited-time $1.29 Whopper Jr. deal.

"The dollar menu will have to evolve," said John Gordon, founder of Pacific Management Consulting Group. "If you talk dollar too much, it erodes the customer's perception of you over time — you don't find a Maserati for a dollar."

Some experts say there's little economic incentive for chains to continue offering dollar meals, which are less profitable than beverages or limited-time promotional items.

More chains are experimenting with pricing, offering different tiers of deals instead of a flat menu of super-cheap options. Restaurants have raised prices to cover increasing food and other costs, hoisting some favorites out of dollar territory.

In the past three years, the number of menu items priced at $1 or less plunged 26 percent at quick-service restaurants, according to a report from the research firm Mintel.

Some formerly loyal customers such as Aesha Adams Roberts would now rather buy a bag of dried beans for dinner than order a 99-cent entree.

The Ventura, Calif., stay-at-home mom, 35, once was proud of her ability to save money using value menus. But after a bout of illness while pregnant, she converted to organic food.

"Dollar menus are horrifying to me now," she said. "They may be budget-friendly, but the food is just really bad."

McDonald's is trying to lure back Roberts and health-minded patrons. In its largest markets, the chain plans to offer side salads, fruit or vegetables as alternatives to french fries in value meals.

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Published: 05/25/18