For years, fast food habits have mirrored the economy. When money gets tight, Americans often turn to drive-thrus. But that pattern is changing. Experts are noticing that even discounts aren’t attracting customers like they used to.
Jonathan Maze, editor at Restaurant Business, says many people have reduced dining out for a couple of years now. This shift has forced chains to rely heavily on discounts as their main marketing strategy.
Recent data shows that 29% of food service traffic is driven by deals. This is the highest percentage in 50 years, according to Circana’s latest report. At the same time, menu prices have surged. From February 2020 to April 2025, prices rose by 31%, according to the National Restaurant Association. This has undoubtedly pressured consumers who look to fast food as a regular option.
The impact of these changes is striking. Bank of America analyst Sara Senatore notes that low-income households are struggling the most, while wealthier families continue to spend more. This has created a unique situation where casual dining places are doing better than traditional quick-service restaurants.
Typically, brands like McDonald’s and Chick-fil-A expect to gain customers when times are tough. But the lower-income consumers, often key patrons for these brands, are under more financial stress than ever before. Costs for essentials like rent, energy, and groceries have all risen sharply. With fast food prices up 30% to 35% since 2018, it’s no wonder many are feeling the pinch.
Many chains are focusing heavily on value to win back these customers, but this strategy poses a risk. Maze warns that heavy reliance on discounts can make customers expect those lower prices, making it harder to bring them back at full price. He cites Subway’s $5 foot-long deal as a cautionary example; the brand still struggles to recover from that discounting strategy over a decade later.
McDonald’s, a key player in this market, recently noted food prices have risen by 29% between 2019 and 2024. Meanwhile, the $5 Meal Deal was introduced earlier this year as part of their promotional efforts. But analysts question whether these deals are truly beneficial to consumers and whether fast food chains can sustain them.
Andrew Charles at TD Cowen suggests these heavy discounts challenge profits for franchises. He believes that chains standing out aren’t necessarily the ones offering the biggest discounts. Instead, those that innovate their menus or craft clever marketing campaigns are seeing success. It’s a reminder that while price is important, it’s not the sole factor in drawing customers.
Interestingly, casual dining chains like Texas Roadhouse and Applebee’s are thriving. Instead of focusing solely on lower prices, they emphasize “abundant value” through meal bundles and ongoing promotions. For instance, Chili’s has seen an uptick in sales partly due to unpredictable yet appealing marketing efforts.
The visibility of this gap between casual and quick-service dining points to a shifting landscape in the restaurant industry. As consumers become more selective with their spending, the next few months will likely see more promotions and unique marketing strategies to capture their attention.
Overall, as Maze points out, there’s unprecedented competition in the industry, and companies are trying various ways to engage customers. The evolution of dining preferences amidst economic changes is something worth watching.
Source link
