Although it bumped Burger King out of second place by positioning itself as a more upscale fast-food burger chain, now Wendy’s is supersizing its value menu by adding a second tier of under-$2 items in addition to a core group of 99¢ offerings.
The company missed analysts’ earnings expectations last quarter, while rival McDonald’s recovered from an October dip in sales by heavily promoting its dollar menu. (The thousands of McDonald’s stores that stayed open on Thanksgiving helped lift sales too.)
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Wendy’s appears to be taking a page from McD’s playbook. Industry publication Burger Business reports that the chain plans to roll out its “Right Price Right Size” value menu, now being tested in some locations, systemwide next year.
In a conference call last month, president and CEO Emil Brolick told investors, “We have lost some share in the value-menu area,” and said the new menu would help the company reverse that slide. Brolick said one culprit was a lack of consistency among franchisees as to which items were on the menu, which confused customers.
According to research firm Technomic, Wendy’s took the No. 2 spot from Burger King among fast-food burger brands last year. Helped along by Burger King’s sluggish response to changing tastes among fast-food diners, Wendy’s stole the King’s crown by focusing on higher-end (and higher-priced) items like bigger, more natural-looking patties and specialty sandwiches like an asiago ranch chicken club.
The problem was, it got almost too good at aligning itself with the higher end of the market. “The new menu is intended to better balance Wendy’s overall menu, which had gotten top-heavy through [the addition] of higher-priced sandwiches,” Burger Business observed.
“We do believe that the number of price-value-sensitive customers out there is not insignificant,” Brolick told analysts. He’s right. Bonnie Riggs, a restaurant-industry analyst at research company NPD Group, says fast-food diners, especially those under 35, are abandoning combo meals in favor of the dollar menu to save a few bucks.
Wendy’s new 99¢ menu will include six core items: value-sized chicken nuggets, fries, soda, small Frosty, junior cheeseburger, and crispy chicken sandwich. There will be a second tier of more profitable items priced from $1.29 to $1.79 that franchisees can choose to offer or else charge what they want, as long as prices stay below $2, Burger Business said. More choice for customers, higher margins for Wendy’s — everybody’s happy.
Burger King’s slogan is “Have it your way.” Maybe Wendy’s should be “Have it both ways.”