Saturday, January 5, 2013

Dollar Menu Marketing Strategies

The marketing battle of the dollar menus continues into 2013 as price-conscious consumers keep a lid on their fast-food spending. Although dollar menus don't do much for the bottom line, they do keep customers coming back (instead of switching to rivals).

Here's the latest on dollar menu marketing strategies:
  • McDonald's trimmed its dollar menu early in 2012...but sales lagged during the fall, so to increase traffic, it put the marketing focus back on the dollar menu ("good taste doesn't cost a lot"). McD's also included new low-price sandwiches and pushed "extra value" meals. The strategy worked: Revenue was up in November. Profits? No word yet. But remember that soft drinks, coffee, and other beverages are typically higher-margin than burgers. So a buyer who chooses a 99-cent burger and adds a cola to the order is helping to balance the profit picture for McDonald's and giving the fast-food chain a higher share of wallet at the same time.
  • Wendy's is emphasizing its "Right Size, Right Price" menu, a dollar menu with an added tier of under-$2 items. This expands lower-price choices for customers and allows franchisees to promote higher-profit items, not to mention helping Wendy's compete more effectively with McD's.
  • Sonic has "everyday deals"--a few budget-priced items in budget sizes. But the strategy is actually to move in the opposite direction, beefing up the premium sandwich menu. And Sonic offers happy-hour deals on discounted soft drinks, an interesting twist in light of the higher profits on drinks.

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