William Simpson
Burger King is planning to offer a $5 meal promotion in an attempt to increase sales, reported Bloomberg Thursday. News of the offer comes amid a increase in fast food prices this scared away budget-conscious customers.
Burger King’s $5 move comes a week after its rival McDonald’s announced its own $5 promotion. BK’s promotion, which appears to be the heavier of the two, will give customers their choice of one of three sandwiches, plus chicken nuggets, fries, and a drink. The burger chain didn’t give an exact time frame for the offer, but said the $5 meal will begin on a trial basis before McDonald’s $5 promotion, which is scheduled to launch on June 25.
“Burger King is accelerating its value offerings after three-quarters leading the industry in value traffic,” a spokesperson told CBS MoneyWatch in a statement. “We are bringing back our $5 Your Way meal as agreed with our franchisees in April.”
Earlier this week, another Burger King rival, Wendy’s, announced a new breakfast combo of potatoes plus an egg sandwich for $3.
Burger King, McDonald’s, Wendy’s and others have turned to promotions and deals in hopes of luring back cash-strapped customers who have backed away from fast-food meals in response to rising menu prices. Foot traffic in certain locations has declined or slowed in growth, restaurants have reported in recent weeks. Casual restaurants like Applebee’s and IHOP are also seeing a decrease in restaurant traffic.
Fast-food chains point to rising labor costs and food costs as the reason for their menu price increases in recent years. In the US, 22 states increased their minimum wage in Januaryeven though the federal base wage is $7.25 per hour.
However, labor rights advocates dispute that rising employee wages are to blame for rising fast-food costs. A march analysis of California fast-food restaurants by the Roosevelt Institute, a liberal think tank, noted the industry’s record profit margins.
The increases appear to be particularly harmful to low-income Americans. One January survey Consulting firm Revenue Management Solutions found that about 25% of people earning less than $50,000 were cutting back on fast food, citing costs as the main concern.
Burger King owner Restaurant Brands International has “seen consumers become a little more price sensitive,” CEO Joshua Kobza told analysts during the company’s most recent earnings call last month. McDonald’s CEO Chris Kempczinski expressed a similar sentiment on an earnings call last month, saying the company needs to be “laser-focused” on keeping prices affordable to keep customers.
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