Credit: Taco Bell
Taco Bell's latest emphasis on the dollar coincides with
McDonald's plans to promote its new $1 $2 $3 Dollar Menu, which
debuts Jan. 4. And when the industry leader discusses pricing,
others are clearly going to respond. As soon as
McDonald's announced the items that will be on the $1, $2, and
$3 items, in a Dec. 5 statement, Taco Bell responded with a play on
its own dollar-focused press release from 2014. Even Jack in the
Box, a smaller rival that's less than one-tenth of McDonald's in
terms of systemwide sales, announced its own lineup the same week.
The "Value Done Jack's Way" menu has items priced at $1, $2, and
$3, a combo for under $5, and debuts in January.
And all of the messages are a continuation of what's been seen
recently. One somewhat unique indicator, fast-feeders' value and
giveaway offers on Facebook, climbed sequentially in the third
quarter, "which we interpret as a sign that promotional activity is
likely to persist," Cowen analyst Andrew Charles noted back in
Taco Bell wants to elevate its value message, says Chief
Marketing Officer Marisa Thalberg, who has an affinity for mixing
storytelling and value messages, and is a self-described bargain
"I've read some statements lately where you see other industry
leaders talking about value with words like it's a race to the
bottom, or you don't ever win on value, and I will tell you we just
couldn't be more philosophically opposed to that," says Thalberg.
"We believe value is fundamental to what we offer and I think
there's a huge difference between being cheap and offering
And dollar-priced items can generate substantial buzz, as
Applebee's has seen with this month's $1 Long Island Iced Tea, or
Dollar L.I.T. Of course, in fast food, such low pricing has been a
mainstay for years.
"What is perhaps different now is that the message that they're
trying to create is not one just of low cost but that we are
innovating, being creative, trying to meet consumer needs with new
products but doing it in a value-oriented way," says David Henkes,
senior principal at Technomic, a restaurant and food industry
consulting firm. "You can't always rely on new products to drive
growth and you can't always rely on value menus to drive growth,
but by doing both I think you're creating a little bit more of a
higher likelihood of success."
Taco Bell plans to start selling a $1 stacker -- it looks like
beef and cheese in a folded tortilla -- for a few weeks starting
Dec. 21, followed by 20 more $1 items in 2018.
"I want someone shopping our value menu to feel as fabulous as
someone buying something at a higher price point from us," says
The Belluminati message will appear online, in movie theater
ads, on streaming and traditional radio, and elsewhere.
"This should not feel like any value advertising you've ever
seen before," says Thalberg.
The right mix of value and new products can entice loyal
customers to buy more and lure new or lapsed customers, generating
the visits the chains needs in a low-growth industry. Technomic
expects U.S. fast-food sales will rise about 3.2 percent this year,
with the chance for a slight acceleration beyond that in 2018,
"The restaurant industry is growing slowly but it's a mature,
saturated market," says Henkes. "It's a competitive market."