At a time of rampant food inflation, many people crave the consistency of promotions tailored around a specific dollar amount.
There was an outcry when sandwich chain Subway cited rising costs to scrap its "$5 Footlong" promotion, while Restaurant Brands International (QSR)'s Burger King has tottered between the "$5 Your Way Deal" and the "$6 Your Way Deal."
Wendy's (WEN) is another burger chain known for dollar amount promotions--the "4 for $4" lets customers pick between one of four sandwiches alongside four chicken nuggets, a small fries, and a drink.
The $5 Biggie Bag also occasionally appears on Wendy's menu and offers a larger choice of burgers and sides for the higher price.
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A Wendy's Breakfast Deal for $3
For fast-food chains, five dollars is often the tipping point at which a promotion starts veering into what customers feel are regular prices--even as, with chains like McDonald's (MCD) and Chipotle (CMG) raising prices by 6% in the last year, it becomes less sustainable.
To appeal to the crowd specifically looking for deals, Wendy's launched a new deal that's about as little as once can pay for more than one item. Available from October 24 to November 20, the $3 Breakfast Deal includes a Sausage, Egg & Cheese Croissant and an order of seasoned potatoes.
The croissant sandwich is one of several breakfast items that Wendy's launched in the last year as part of its efforts to tap into the morning market. Items like the Breakfast Baconator, French Toast Sticks, and the Hot Honey Chicken Sandwich have all been new additions to a breakfast menu that Wendy's has been marketing aggressively over a number of months.
"We believe our breakfast business in the U.S. will accelerate in 2022 by approximately 10% to 20%, taking average weekly U.S. breakfast sales to approximately $3,000 to $3,500 per restaurant by year-end," Wendy's CEO Todd Penegor said during a past earnings call.
While breakfast is often the easiest meal to grab at home, the rising cost of ingredients is pushing many people to the fast-food industry.
Inflation, Deals and the Fast Food Industry
A Placer.ai report found that, while overall restaurant visits fell 7.6% and 13.7% in August, McDonald's traffic rose by a respective 4.7% and 3.1%. Visits during breakfast hours of 5 a.m. to 11 a.m. jumped from 16.2% of the total to 17.7%.
The study attributed these numbers to the higher cost of ingredients commonly associated with breakfast--egg prices rose by 46.8% between 2021 and 2022 while a pound bacon of bacon jumped by more than 30%.
Depending on the exact cost of eggs in one's area and how often one cooks, a $3 breakfast sandwich may even be more affordable than buying all the ingredients and making similar foods oneself--particularly for those who live alone and are buying all the ingredients for a particular dish they're making once rather than pulling from a pantry that gets stocked regularly.
"The rising retail costs of breakfast foods may be driving more consumers to McDonald's for the most important meal of the day," wrote the Placer.ai report's authors.
When it comes to Wendy's, the focus on breakfast has been proving profitable--the company recently reported breakfast sales at an average stores to be $2,500 a week.
This is $500 above the "break even point" the chain had hoped to reach and, when it launched the $1 "Buck Biscuit" promotion, those soared to $2,700.
