SALON

Wednesday, Jan 2, 2013 9:45 PM UTC

Wendy’s moves past ’99 cents’ with new value menu

By

Topics: From the Wires,

NEW YORK (AP) — Wendy’s no longer thinks a hamburger has to be 99 cents to be a deal.

The fast-food company known for its Frosty shakes and square burgers has replaced its 99-cent value menu with a beefed up array of options called “Right Price Right Size,” with items ranging from 99 cents to $1.99. At a time when costs for meat, cheese and other ingredients are rising, the revamped menu is intended to give budget-minded diners more options, while giving Wendy’s more flexibility on pricing.

The switch to the “Right Price Right Size” value menu reflects the cost pressures facing fast-food chains. Burger King and McDonald’s have already moved past the $1 price point, offering tiered value menus that go up to around $2.

When it was introduced a decade ago, for example, McDonald’s Dollar Menu included the Big ‘N Tasty burger made with a quarter-pound beef patty. But the Dollar Menu has gradually gotten skimpier, with small fries being taken off the roster last year.

To ensure the profitability of its new value menu, Wendy’s tinkered with the lineup and in some cases raised prices. The Junior Cheeseburger Deluxe now costs $1.19, instead of 99 cents. And for 99 cents, customers now get four chicken nuggets, instead of five. The plain Junior Cheeseburger, which had been taken off the menu, is back at 99 cents.

In all, there are now seven items that cost 99 cents on the new value menu, down from nine.

Although items on value menus tend to be less profitable, they play an important role in attracting customers who often end up spending more on other items. In testing over the past year, the “Right Price Right Size” menu not only boosted customer traffic, but also increased the average check size, said Craig Bahner, chief marketing officer at The Wendy’s Co.

“It grew because those customers tend to buy multiple products,” Bahner said, noting that the “vast majority” of customers who ordered off the value menu bought items from the regular menu as well.

Wendy’s isn’t the only chain to tinker with its value offerings. McDonald’s last year introduced its “Extra Value Menu,” which offers items closer to the $2 price range. But after sales flagged, the company quickly went back to touting the Dollar Menu in advertising, noting that customers are focused on value in the uncertain economy.

Howard Penney, a restaurant analyst for Hedgeye Risk Management, said McDonald’s return to the Dollar Menu “doesn’t make sense” in terms of profitability at a time when beef prices continue to climb. But he noted that Wendy’s needs to emphasize value to stay competitive.

“They have to respond. They can’t just ignore it,” Penney said.

Wendy’s revamped approach also reflects the twin challenges facing traditional fast-food chains, which are scrambling to improve the reputation of their food even as they cater to budget-minded diners. As the popularity of chains such as Panera Bread Co. and Chipotle Mexican Grill Inc. have raised expectations for food quality, traditional fast-food chains have stepped up their offerings.

Burger King made its French fries thicker and uses a different kind of bacon on its burgers. Taco Bell — known for its cheap eats — introduced a line of Cantina Bell bowls last year intended to appeal to a slightly more upscale crowd.

Wendy’s, which is based in Dublin, Ohio, has in recent years introduced natural-cut French fries and premium offerings such as Dave’s Hot ‘N Juicy burger. Even as it touts its new value menu, Bahner says Wendy’s won’t let up on that premium front. For example, executives have said the chain will introduce new breads for its sandwiches intended to improve perceptions about its food in the year ahead.

Still, Bahner notes that value menus have long been an important staple in the fast-food industry. And given ongoing macroeconomic trends, he said that emphasis on value will remain critical for years to come.

___

Follow Candice Choi at www.twitter.com/candicechoi

More By Candice Choi.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
GOP opposes right to vote - Iraq's new constitution has something America's doesn't: The right to vote. Republicans want to keep it that way
21 points22 points | 5 comments
vote
Report: Nearly a quarter of all Americans struggle to afford food
22 points23 points | 6 comments
vote
Brad Pitt keeps breaking his silence on how boring marriage to Jennifer Aniston was
17 points18 points | 26 comments
vote
Journalists file suit against Manning's trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
20 points21 points | comment
vote
Journalists file suit against Manning trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
15 points16 points | 1 comment

From Around the Web

Presented by Scribol
listener_new_rect The Listener: Chekhov's story mirrors Russia's own

Recommendations