Two dinners for $20. Gotta love that. And most of us do love that. That’s just the problem for the casual-dining restaurants that lure customers in with them as a limited-time offer (LTO). They create monsters. Think Chili’s and Applebee’s. They made money off of the “two for $20” LTO dinners for several years only because it brought in more guests. But once the deals were off, the value-oriented customers were out of there. Sales went down. The deals had to be brought back. And thus went the cycle.
Enough of that nonsense.
Now go to Applebee’s and Chili’s, and you’ll find the deals are a permanent fixture on the menu. It’s a new way of thinking for full-service restaurants that fast-food restaurants have been onto for a few years. It used to be called barbell pricing. Now it’s called tiered pricing. There must be something on the menu for everyone—the value-seeker and the hungry one looking to indulge with little thought to price.
Among fast-food restaurants, the latest obvious example is Wendy’s. It has a value menu (“My 99¢ Everyday”), but at the indulgent end, it has Dave’s Hot ‘N Juicy Cheeseburgers that are at least $4. And now, in the middle, they have the new “W” cheeseburger for $2.99 that has two 2.25-ounce patties. There’s something for everyone—quality and price-wise.
That’s what casual-dining restaurants are discovering.
It’s this new equation that may lead the full-service restaurant segment out of negative sales. According to Mintel, full-service restaurants’ sales were down 0.7% in 2011 (after being down in 2010, also), while limited-service restaurants (which includes fast-food and fast-casual restaurants) experienced 3.4% growth in 2011.
The economy will likely pick up, which will improve sales for full-service restaurants, but if they play their menu pricing/value strategy right, sales will likely go up in spite of the economy.
What that means for all of us, expect some pleasant permanent price deals on nearly any full-service restaurant menu going forward. I’m thinking-the kind where you pick a salad, entrée and side for a more reasonable price than you might have expected before. That will be the value side of the menu. Just start looking for it. I saw it at Ruth’s Chris Steak House last month.
Tell me what you find.
Jody