Faster than you can say “Forget 99 cents!,” two big fast-food chains are unwrapping burgers that could lure customers away from the low-priced choices that eased the brands through the Great Recession.
Call them mid-tier burgers, priced to fill the gap between each chain’s new premium choice and the smallest sandwiches on their respective menus.
Indeed, “mid-tier product” is the description Wendy’s uses for its W burger, which will be rolled out in December. “This is going out at a $2.99 price point,” new CEO Emil Brolick explained to investors yesterday. “One of the things we want to do is put a product out there that we think is going to encourage people to trade up. Perhaps those individuals that are purchasing [a] 99-cent item will trade up to this product.”
The lure, he said, is a strong flavor and a high-craft aspect to the burger, which has about “two, 2.5 ounces” of fresh beef.
That seems to be the same strategy Burger King is employing with its new BK Toppers line. The burgers are dressed with flavorings like Swiss cheese, mushrooms and barbecue sauce. They’re heftier than the W’s, with 3.2 ounces of beef, but will be priced at $1.99, according to franchisee Carrols Restaurant Group.
That puts it between BK’s regular and Mini burgers on the low-price end, and the new BK Chef’s Choice at the high end, with a price of $4.99.
The two giants aren’t alone in sandwiching mid-priced burgers between their bargains and their biggies. Carl’s Jr. recently added new Steakhouse burgers, arrayed on the menu between its Six Dollar Burger line (typically priced around $4) and its Famous Star singles.
Missing among the converts is the segment’s true king, McDonald’s. First in size as well as sales growth, it’s been relying with stunning success on its beverages and snack-type items, leaving its burger line-up largely untouched since the rollout of the Angus line.
Showing posts with label menu pricing. Show all posts
Showing posts with label menu pricing. Show all posts
Thursday, November 10, 2011
Wednesday, May 4, 2011
Maybe you should sell T-shirts
Good news for family travelers: You won’t have to drive three hours this summer to take in attractions like Paul Bunyan’s Giant Ball of Tinfoil. This vacation season those educational opportunities will be no more distant than the nearest restaurant, where June, Skipper and Princess can witness the World’s Greatest Vise in action.
But first, a primer is in order. During the Great Recession, discounting was one of the few ways restaurants could brake the loss of customers. And, man, did they use it. According to Burger King franchisees, they were actually losing money on some of the bargain-priced items they were forced to sell by corporate. McDonald’s ‘zees similarly griped about the dollar price tag they were pressed to put on some breakfast options.
Rock-bottom deals weren’t merely a quick-service phenomenon. Steak chains survived the downturn largely by giving customers low-ticket alternatives, like bar menus and drink specials. Casual chains bundled their selections, packaging two entrees and a shared appetizer at what an entree alone might’ve once cost.
Deal-making, once merely a tactic, became a fundamental strategy. Customers came to expect the deals. Some might say they became addicted. But, hey, the approach worked.
The industry might’ve had time to ease through a reasonable detox. But the rise in commodity costs snatched that option away. Patrons still refused to step through the front door unless they were offered a steal. But the bargains were harder for operators to swallow because ingredients like tomatoes and beef were costing a lot more at the back door.
Voila: The World’s Greatest Vise, a.k.a. the after-Recession squeeze on margins.
Commodity prices are difficult to cover because they’re slipperier than an eel with a law degree. The direction can shift profoundly, one way or another, in a matter of days or weeks.
But recent headlines suggest we’re seeing just the beginning of the climb.
Consider, for instance, one little-noticed effect of last week’s tornadoes in the Southeast. The twisters hit nearly 400 chicken coops in Alabama alone, or roughly 25% of the state’s bird-rearing facilities. The Wall Street Journal reported that about 5 million birds were killed, putting an extreme crimp in supply.
That devastation came as chains like Wendy’s were tinkering with new chicken sandwiches, a move interpreted by many observers as a reaction to soaring beef prices.
The good news: Chickens require only about six weeks to reach maturity. If facilities can be repaired and flocks replenished, the damage could presumably be offset quickly.
Not so with sugar. The Journal, a real bummer this past week, reported that domestic crops of sugar cane were undercut by Florida’s cold snap in December.
Yet to be determined, it added, is the effect of flooding on Midwest areas that cultivate sugar beets. The experts are gauging how the rainfall affected plantings for the spring and summer growing season.
And, just to put that (unsweetened) cherry on top, the paper noted that the U.S. government is tightening the cap on sugar imports.
Not that the worldwide market is awash in the stuff. Bloomberg reported a few months ago that cyclones destroyed much of Australia’s sugar-producing fields. The European Union had already addressed the issue.
So had the United States. Farmers had indicated an intention to cultivate more sugar beets to exploit the worldwide opportunity. Oh, well.
At least families won’t have to use as much gas this summer to take in cultural sites like House o’ Mud, Alligatorville and Michigan’s Largest Ball of String.
Maybe they’ll use the savings to buy a drive-thru burger—at full price.
But first, a primer is in order. During the Great Recession, discounting was one of the few ways restaurants could brake the loss of customers. And, man, did they use it. According to Burger King franchisees, they were actually losing money on some of the bargain-priced items they were forced to sell by corporate. McDonald’s ‘zees similarly griped about the dollar price tag they were pressed to put on some breakfast options.
Rock-bottom deals weren’t merely a quick-service phenomenon. Steak chains survived the downturn largely by giving customers low-ticket alternatives, like bar menus and drink specials. Casual chains bundled their selections, packaging two entrees and a shared appetizer at what an entree alone might’ve once cost.
Deal-making, once merely a tactic, became a fundamental strategy. Customers came to expect the deals. Some might say they became addicted. But, hey, the approach worked.
The industry might’ve had time to ease through a reasonable detox. But the rise in commodity costs snatched that option away. Patrons still refused to step through the front door unless they were offered a steal. But the bargains were harder for operators to swallow because ingredients like tomatoes and beef were costing a lot more at the back door.
Voila: The World’s Greatest Vise, a.k.a. the after-Recession squeeze on margins.
Commodity prices are difficult to cover because they’re slipperier than an eel with a law degree. The direction can shift profoundly, one way or another, in a matter of days or weeks.
But recent headlines suggest we’re seeing just the beginning of the climb.
Consider, for instance, one little-noticed effect of last week’s tornadoes in the Southeast. The twisters hit nearly 400 chicken coops in Alabama alone, or roughly 25% of the state’s bird-rearing facilities. The Wall Street Journal reported that about 5 million birds were killed, putting an extreme crimp in supply.
That devastation came as chains like Wendy’s were tinkering with new chicken sandwiches, a move interpreted by many observers as a reaction to soaring beef prices.
The good news: Chickens require only about six weeks to reach maturity. If facilities can be repaired and flocks replenished, the damage could presumably be offset quickly.
Not so with sugar. The Journal, a real bummer this past week, reported that domestic crops of sugar cane were undercut by Florida’s cold snap in December.
Yet to be determined, it added, is the effect of flooding on Midwest areas that cultivate sugar beets. The experts are gauging how the rainfall affected plantings for the spring and summer growing season.
And, just to put that (unsweetened) cherry on top, the paper noted that the U.S. government is tightening the cap on sugar imports.
Not that the worldwide market is awash in the stuff. Bloomberg reported a few months ago that cyclones destroyed much of Australia’s sugar-producing fields. The European Union had already addressed the issue.
So had the United States. Farmers had indicated an intention to cultivate more sugar beets to exploit the worldwide opportunity. Oh, well.
At least families won’t have to use as much gas this summer to take in cultural sites like House o’ Mud, Alligatorville and Michigan’s Largest Ball of String.
Maybe they’ll use the savings to buy a drive-thru burger—at full price.
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