Change in the fast food industry is like dehydration. By the time you notice it, it’s already too late. That’s the ship McDonald’s, Burger King, Wendy’s, Taco Bell, KFC, and many others have found themselves in over the past five years. In one sense, you can hardly blame them. For industry giants like the aforementioned names, they’re like massive cruisers—which means that turning them, and setting a new direction takes time, more time at least than wieldy little skiffs like Smashburger or Blaze pizza, chains which are skyrocketing in growth, and can shift and surge forward at a moment’s notice.
The sleeping giants of the old guard have gone through an identity crisis, being squeezed by price competition from pizza chains, and rising ingredient costs, and by quality competition from fast-casual chains, like Chipotle and Five Guys. Stocks have fallen, stores have closed, CEOs have shuffled in and out, everyone and their brother has stepped forward with opposing suggestions for reform. In short, things have not looked pretty.
Yet these large companies have had plenty of buffer room. These chains are household names. Their brands are recognizable internationally by a mere logo or slogan. So they’ve had time to right the ship, and it appears that now, finally, they have forged a strategy, and a consensus is appearing. It looks as if they are going back to the bottom line—cheap. Remember the old days? When you used to go in to Wendy’s and walk away with a full stomach? Even if it wasn’t a good full, you paid only from the change in your pocket. Maybe that’s not gone forever. Okay, well the change part probably is, but Wendy’s, for example, now has the four for $4 deal. Four menu items for $4. When eating out, you won’t beat those prices, and then there’s even selection on that price point. McDonald’s also appears to be diving back down to their roots, trying to emphasize their value menu. Burger King opened up a new deal in late November, offering ten nuggets of $1.49. That’s borderline scary pricing.
How will they still turn a profit? Well, the gamble has been placed on low profits, but high volume. At this point, almost any decision counts as a real step toward improvement. Only time will tell, but this appears to be the best strategy. The fast-casual, healthy-ingredient, trendy-customized game has advanced too far. Those newer chains have almost forged a new tier of restaurant altogether. The competition is too fierce and the margins are too thin, and the success of those chains is too dependent upon catching the latest wave of trendiness. The old guard chains have quickly found themselves outclassed and outmaneuvered when trying to compete on this level, and so they are returning to the distinctives which first separated them from sit-down restaurants: value and speed.
Check out this year’s fast food top 20 to see where everyone fell in.