Wednesday, June 6, 2012

$5 deal gets some powerful new challenges

The $5 hero, a powerful customer draw for Subway and its mass-market competitors, is getting new competition. Chains of a different stripe are challenging the sandwich giants’ signature value by introducing either lower-ticket alternatives or comparably priced options that promise better quality.

And because two of those challenges are powered by the ad budgets of two Yum! Brands, it promises to be a bruising fight.

Pizza Hut is all but chopping on Subway’s mother in the new marketing push for the P’Zola, the latest attempt by Yum’s pizza specialist to crack the lunch market with some Italian-sounding hand-held item (the previous incarnation was the P’Zone). The introduction included what chain headquarters cheekily termed a “subway takeover,” or renting two cars of a Chicago “L” train line.

The P’Zola is priced at $3, or two for $5. And in case you don’t get the challenge posed to Subway, consider the trash talking of Pizza Hut CMO Kurt Kane: ““When we took a look at the sub category we decided consumers needed us to bring this same approach to that space.  We think people are quickly going to see they can get a lot more for their $5 with the new P’Zolo.”

Meanwhile, Pizza Hut’s Mexican sister is taking the quality tack. Taco Bell announced today that most of its 6,500 U.S. stores will add the Chipotle-inspired Cantina Bell menu next month. The burritos and bowls—Chipotle’s signature meals—will be priced under $5. Suddenly, Subway’s bargain-hunters will have a new choice, as will Chipotle fans who figure they can get the same for less.

Yum isn’t alone in trying to muscle into the $5 market. Togo’s, the regional sandwich chain, just unveiled a line of meals called Deli Deals, priced at—wait for it--$5 each. That includes the drinks and chips, which are ticket add-ons at Subway.

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