Price wars and deep discounting in fast food is nothing new. After all, fast food is designed to be fast, cheap and easy.
But discounting has gotten so aggressive lately that the cost of food has gone down to 15 cents per chicken nugget at Burger King to free at McDonald's, thanks to a new partnership with American Express in which cardholders can spend points at the Golden Arches.
Starting this week, AmEx's U.S. cardholders can spend points at select McDonald's Corp. restaurants. The conversion rate is 100 points for each $1 spent, so someone with a robust cache and no wanderlust to spend points on a trip to Paris (say 100,000 points), can stay home with 208 Big Macs (110,240 calories).
The deal is a landmark -- AmEx's first letting cardholders redeem points at a cash register, according to Leslie Berland, who oversees the lender's digital partnerships. By December, consumers will be able to redeem points inside McDonald's across the U.S. or use their card at a drive-thru and apply points later using an AmEx website or mobile app.
"We're constantly looking for ways to make life easier for our customers," Deborah Wahl, chief marketing officer at McDonald's USA, said in a statement.
How much do you have to spend on your AmEx to get a free lunch? If you spend $200 on a facial and one-hour massage in Manhattan, and the cashier can legitimately ask, "Do you want fries with that?"
Then last week, Burger King announced a 10-piece chicken nugget order will cost $1.49 -- or 15 cents per nugget -- for a limited time in the U.S. Miami-based Burger King regularly sells the nuggets for $2.99. While a majority of franchisees will offer the discount, the company hasn't said how long it will run.
Burger King's new promotion sharply undercuts a recent McDonald's discount in which it offered a 20-piece Chicken McNugget for $5.
Ongoing deals or Burger King include its 2 for $5, a deal in which customers can get two sandwiches for $5. McDonald's has also been heavily pushing value and has even had some stints in which it offers free coffee.
Heavy discounting has long been part of fast food, but it hit a fever pitch during the recession as consumers cut spending and the fast-food industry struggled with lagging sales. McDonald's fared much better than its competitors during the recession, but it began discounting heavily nearly two years ago when it sought to combat decelerating sales.
Burger King is struggling to boost same-store sales in the U.S. and Canada. Sales increased 0.4% in that region in the second quarter. McDonald's, based in Oak Brook, Ill., has seen a domestic sales slump recently. Sales at McDonald's U.S. locations open at least 13 months fell 2.8% in August, the fourth straight monthly decline.
~~ Bloomberg News and Ad Age bureau reports