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Recently, VCPost learned that fast-food chains like McDonald's is extending their $5 meal deals to attract budget-conscious customers. The value meal, which was later on adopted by Taco Bell, Burger King, and Wendy's, promise to counter the impact of high prices that have driven low-income consumers away.

However, CNBC reported that investors remain skeptical about the long-term benefits of these discounts, fearing they may not boost sales.

With fast-food companies preparing to release their second-quarter earnings, there are growing concerns about declining customer visits and sluggish sales.

While chains such as Chipotle have seen exceptions, others are struggling to maintain traffic. McDonald's reported an increase in customer visits due to the $5 meal deals, but Wall Street is cautious about expecting a substantial sales boost from these promotions.

Fast-food Chains Discounts for Budget-Conscious Customers

Fast-food chains usually offer discounts in the first quarter to attract budget-conscious customers after the holiday season. However, this summer, they are also using discounts to boost customer visits and sales. Robert Byrne from Technomic explains that restaurants can't increase their prices much more, so they need to use discounts instead.

The effectiveness of these value meals depends on whether customers will make additional purchases, such as adding a milkshake or an extra entrée. Without such upsells, the discounts could reduce profits and become unsustainable.

Franchisees, who often resist discount strategies due to profit concerns, have also shown wariness over profit.

Despite these challenges, McDonald's and other fast-food chains extending the meal deal saw a positive response from customers.

Tags

Fast food, Mcdonald's