Consumers had a lot to face in 2024 as inflation continued to rise and deeply impacted both grocery and restaurant menu prices. In response, restaurant owners saw a significant decline in customers dining out, necessitating new strategies to bring diners back. Thus, 2024 marked the return and rise of value promotions—and for many restaurants, particularly in the quick-serve spaces, these campaigns were successful.
The first to achieve value promotion success in 2024, according to Nation’s Restaurant News’ Alicia Kelso, was McDonald’s, particularly with the return of their $5 Meal Deal, alongside other nods to nostalgia items. “‘The $5 Meal is doing exactly what we set out to have it achieve. Those things are coming to life’,” chief financial officer Ian Borden said during the company’s earnings call last month. The Meal Deal swung momentum in McDonald’s favor toward the end of Q3 and solidly into Q4 before an E. coli crisis squandered the company’s progress.”
Following in McDonald’s success, other brands began to develop value promotions, “creating plenty of ‘noise, several executives pointed out, making it more difficult to perch atop minds despite the implementation of lower price points.” Despite the made rush to advertise eye-catching deals and invite customers back, there were some stand-out promotions that accomplished the goal. “Several chains were able to break through some of that noise toward the end of Q3 and into Q4, reporting sequential improvements of both sales and traffic, including Potbelly, Red Robin, Noodles & Company, Cheesecake Factory, Popeyes, Wendy’s, First Watch, and Papa Johns,” NRN reports.
Alongside these targeted value promotions, restaurants also refocused on loyalty programs, to achieve a similar but more consistent result. Kelso writes, “As brands jockey over more discerning consumers, loyal customers – who spend and visit more – are becoming more valuable. As such, loyalty programs have become a bigger priority of late.” Whether a one-time value promotion or a rebranded and reenergized loyalty program are the better way back to customers, likely depends on the restaurant and target audience.
Overall, Kelso reports that numbers in the latest quarter are mostly “ho-hum” and restaurant owners are still hoping for the industry to stabilize after a tough year. “Let’s just hope those repeatedly reported “sequential improvements” toward the latter part of the quarter and into Q4 continue to hold through the end of the year and into 2025,” she writes.
Richard Weil, owner and principal of National Restaurant Consultants is an avid reader and student of the industry. Weil writes, “it is our belief that moving into Q2 of 2025 the economic outlook for the food service and hospitality industry performance will improve. Several Key Economic Indicators (KEI) will need to fall into place including lower interest rates, continued stability in commodities, and consumer confidence perhaps being the largest factor.
To begin to prepare for 2025, consider reaching out to a restaurant consultant. With solid business analysis, our consultants can engineer menus and develop effective advertising and value promotion to launch your business’s 2025 year.