Between the falls of 2021 and 2022, the average item at Taco Bell got 14.6% more expensive. The difference is only between $2.94 in September 2021 and $3.37 in October 2022, the upward trend reflects a year of chains raising prices to keep up with widespread food inflation.
While the last month finally saw some decline, food prices were up 10.4% from a year ago in December. This includes an 11.8% increase for groceries and an 8.3% increase for eating out. Popular fast food chains like Wendy's (WEN) and Chick-fil-A raised their prices by a respective 35% and 15.6% in 2022.
The higher prices have largely not affected the number of people eating at some of the most popular chains but did bring down quick-service restaurant traffic overall.
Data from Placer.ai found that visits to McDonald's (MCD) were up 26.2% in the last quarter of 2022 while Chipotle (CMG) also saw 28.7% more visitors in the same time period. At the same time, overall quick-service visits were down 10.4%
Inflation Gives New Meaning To Those Value Deals
In one earnings call, Chipotle CEO Brian Niccol said that they saw lower-income customers come in steadily but place smaller orders with fewer add-ons such as guacamole and drinks.
"What we saw was probably not all that different from what people have been saying," Niccol told analysts in a July 26 call. "The low income consumer definitely has pulled back their purchase frequency."
As a result, many chains have been increasingly relying on combo deals and "value packs" to continue to lure in visitors. Restaurant Brands International (QSR)'s Burger King has spent the last year flip-flopping between a 2 For $5 Your Way Deal and a 2 For $6 Your Way Deal while Wendy's temporarily brought back its $5 Biggie Bag that includes a choice of sandwich with four-piece nuggets, small fries and a small drink.
In general, industry analysts frequently call $5 as the exact price that divides what, in many customers' minds, is a "good deal" and a regularly-priced item.
Taco Bell
The $5 Taco Bell Cravings Trio Goes Nationwide
Last December, Taco Bell was spotted testing a new promotion called the "Cravings Trio" at some Ohio and Nebraska locations. For $6, customers got a main item like the Mexican Pizza, Crunchwrap Supreme or Cheesy Gordita Crunch with a Doritos Locos Tacos and a medium-size fountain drink.
The test was evidently well-received because, this week, Taco Bell announced that it was taking the Cravings Trio promotion nationwide. Reworked to feature one different main, the new deal swaps the Mexican Pizza for a Burrito Supreme and now costs $5 instead of $6.
Otherwise, customers can still choose between the latter and a Crunchwrap Supreme or Cheesy Gordita in a value pack with a drink and Doritos Locos Tacos. This is still a limited-time promotion that will be phased out by something different later in the year -- last spring, Taco Bell experimented with a $5 breakfast box with a Grande Toasted Breakfast Burrito, hash browns, two Cinnabon Delights donut holes and a warm drink.
It also has a permanent "My Cravings Box" $5 combo with a burrito, taco, chips with nacho sauce and a soft drink. One year, Taco Bell revealed that it earned over $1 billion just from purchases of its $5 boxes.
