Americans are turning to sit-down restaurants like Chili’s instead of fast food chains like McDonald’s due to rising prices in the fast food industry. Chili’s parent company, Brinker International, reported a significant increase in same-store sales and traffic due in part to a promotion of a new burger that directly competes with fast food options. Customers were frustrated with fast food prices, prompting Chili’s to run ads that compared its new Big Smasher burger to the popular Big Mac.
Chili’s launched a $10.99 meal deal that included the Big Smasher, described as having twice the beef of a Big Mac and flavors familiar to fast food lovers. Despite not having two patties like the Big Mac, the Big Smasher includes a half-pound slab of meat with similar toppings like onions, lettuce, pickles, cheese, and Thousand Island dressing. This promotion has been successful in driving traffic and tapping into the cultural conversation about fast food prices.
Applebee’s also focused on value in the quarter, offering a $9.99 burger to compete in the new landscape of affordable sit-down dining. John Peyton, CEO of Dine Brands, highlighted the comparable cost of a meal at McDonald’s versus Applebee’s, emphasizing the advantages of dining in a restaurant setting rather than a fast food location. This overlap of price points presents a new opportunity for sit-down restaurants to attract customers from fast food chains.
While Chili’s and Applebee’s have seen success in offering value meals, fast food chains like McDonald’s, Burger King, and Wendy’s have struggled. In response to Chili’s promotion, McDonald’s launched a $5 deal that has been extended due to its success in driving customers back to their restaurants. This promotion has even led to increased sales of full-priced items, indicating a positive trend for the fast food giant.
Despite the success of Chili’s value meal promotion, Brinker International’s stock shares dropped 11% due to profits falling below analyst expectations and investor concerns about the future outlook. However, the success of Chili’s, as well as the response from fast food chains, indicates a changing landscape in the restaurant industry. Customers are now presented with comparable options at sit-down restaurants like Chili’s and Applebee’s, leading to increased competition among traditional fast food chains. The focus on value and affordability is driving traffic and changing the way customers perceive their dining options.
