Burger King, Domino’s pull back on value menus as costs rise

 

Inflation is coming to a longtime refuge of price-conscious consumers: restaurant value menus.

Burger King, Denny’s Corp. and Domino’s Pizza Inc. are among the chains that are reducing their menu of discounted items or shrinking portions to try to improve their margins, executives said. Some chain executives hope the trimming of discount menus and meal deals might bring less pushback from consumers than straight price increases.

McDonald’s Corp. earlier this year began letting franchisees sell sodas for higher prices, after all sizes of the drinks were promoted nationally for a dollar for several years, the company and franchisees said. Denny’s is promoting fewer low-cost items on its menus as the family-dining chain’s executives said more customers are willing to pay for a sit-down experience.

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"I want the $9 omelet. I want the gourmet pancakes. I want a second round of coffee. I’m not here for a deal," Denny’s Chief Executive John Miller told investors last month. The chain still has a pancake meal deal starting at $4, but no longer advertises a whole value menu of items between $2 and $8, Mr. Miller said at an industry conference.

Burger King dollar menu

U.S. consumer prices are climbing, with a 7% annual increase in December representing the biggest gain since 1982, the Labor Department said. Supply-chain challenges, strong demand and consumer stimulus payments are all contributing to rising prices, economists say.

Restaurant prices rose 6% in the year ended December, the biggest increase in nearly four decades, federal figures show. Many chains increased prices multiple times last year as they tried to compensate for rising costs for labor, food and materials, and have said that more increases could come in 2022 if the inflation persists.

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Customers are starting to notice restaurants’ higher prices. Diners reviewing restaurants online in the last three months of 2021 were increasingly negative about the value of what they received compared with the same period in 2019, according to Black Box Intelligence, which regularly tracks consumers’ online comments about restaurants. At fast-food brands, customers noted "not worth it," "overpriced" and "waste of money."

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