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McDonald’s restaurant in San Diego, California, U.S., Oct. 31,2025.
Mike Blake | Reuters
“value” was the buzzword du jour for restaurant executives that lasted all year – and it will likely stick around in 2026, too.
Over the last year and a half, diners, particularly those who make less than $40,000 a year, have been eating out less frequently and spending less money when they do. Higher costs, like rent and child care, have put pressure on consumers’ wallets. Plus, uncertainty about the economy, President Donald Trump’s higher tariffs, layoff fears and immigration crackdowns have all hurt their willingness to spend.
As diners strain under pressures on their wallets, restaurants, takeout and food delivery is the category where discretionary spending is most likely to fall, according to the EY-Parthenon U.S. Consumer Sentiment Survey. Nearly a quarter of respondents said that they would first cut spending on eating out, ahead of entertainment, travel and home maintenance.
it’s no surprise, then, that data from Black Box Intelligence shows that traffic to restaurants open at least a year fell every month this year through November, with one exception: July. That month,guest count ticked up 0.1%.
To win back a shrinking pool of diners, restaurants have responded by doubling down on efforts to offer diners more “value.” In the fast-food segment, that means combo meals and value menus.
For casual-dining chains, value has translated into appetizer deals, marketing that compares the narrowing price gap with fast food, and a focus on the in-restaurant experience. And fast-casual chains have responded by emphasizing their quality while trying to stay away from the so-called value wars.
“This is the most intense discount environment since the Great Recession,” Cava co-founder and CEO Brett Schulman said on the company’s earnings conference call in November.
McDonald’s value push
To understand the industry’s evolving value strategy, look no further than McDonald’s.
McDonald’s Value Push: A Strategy Shift and What It means for Fast Food & Fast Casual
For much of 2023 and 2024,mcdonald’s embarked on an aggressive strategy to win back budget-conscious customers: deeply discounted Extra Value Meals.These weren’t just typical promotions; they represented a meaningful shift for the fast-food giant, and a potential bellwether for the industry. Now, as the company prepares to phase out financial support for these deals, a new phase is beginning – one that will test franchisees’ commitment to value.
The Value offensive
McDonald’s introduced the $5 Extra Value Meal in late 2023,a move that initially worried some franchisees. The concern? Eroding profit margins. Typically, quick-service restaurants rely on a “loss leader” strategy – offering inexpensive items to draw customers in, then upselling them on higher-margin products.
“It’s hard to sell things in the [quick-service restaurant] world for $5 and make your margins,” explained restaurant industry analyst Robert Bandy. “Those chains are hoping that somebody in the car is also ordering a full price value meal at $9 so they can balance it out, so that’s part of the strategy there.”
To alleviate franchisee concerns, McDonald’s, which franchises 95% of it’s restaurants, stepped in with corporate marketing support and co-invested in the discounts. Coca-Cola also contributed marketing funds,making the deals more appealing to operators.
“McDonald’s offering subsidies to franchisees is definitely unusual, and [it shows] that they have high conviction that what they’re doing is really going to help repair the value perception to lead to a healthier trajectory as we get to 2026 on same-store sales,” said TD Cowen analyst Andrew Charles.
By early November, CFO Ian Borden announced that corporate support would end by the first quarter of 2026.
The Shift to Accountability
As the financial safety net disappears,McDonald’s will begin holding franchisees accountable for the value they offer. While operators will retain pricing control, new franchising standards will evaluate whether prices are too high, particularly if they negatively impact restaurant traffic or customer satisfaction.
After a year of offering incentives, McDonald’s is now implementing stricter standards, but the core focus on value remains unchanged.
Fast-casual’s Struggles
While fast food has engaged in price competition,the fast-casual segment has largely avoided value wars. This strategy has proven detrimental to sales for companies like Cava,Sweetgreen,and Chipotle Mexican Grill.
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Chili’s Turnaround: A Case Study in value and Marketing
Chili’s, the casual dining chain, has experienced a remarkable resurgence, reporting double-digit same-store sales and traffic growth throughout the year.This success isn’t accidental; it’s the result of a strategic turnaround led by CEO Kevin Hochman and a marketing approach that cleverly addresses current consumer behavior. The key? Positioning Chili’s as a compelling option to both fast food and fine dining.
Understanding the Shift in Consumer Behavior
Several factors have contributed to Chili’s success. The economic climate has led to a phenomenon called “trading down,” where consumers accustomed to higher-priced dining options seek more affordable alternatives. Together, consumers are still looking for experiences and quality that fast food often doesn’t provide. Chili’s has positioned itself perfectly to capture both of these trends.
What is “Trading Down”?
“Trading down” refers to the consumer behavior of switching from more expensive brands or products to cheaper alternatives, frequently enough due to economic pressures or a desire to save money. In the restaurant industry, this means diners who previously frequented upscale restaurants are now opting for casual dining options like Chili’s. It’s not necessarily about sacrificing enjoyment, but about finding a balance between value and experience.
The Power of the $10.99 Big Smasher
Chili’s directly challenged the fast-food industry with its $10.99 Big Smasher meal. This wasn’t just about price; it was about offering a higher-quality, more satisfying meal at a competitive price point. By directly comparing its offering to fast-food options,Chili’s highlighted the value proposition – more food,better quality,and a more enjoyable dining experience for a slightly higher cost.
Why This Strategy Worked
- Price Sensitivity: Consumers are acutely aware of prices, especially in an inflationary environment.
- Value Perception: The Big Smasher wasn’t just cheap; it was perceived as a good value – a lot of food for the money.
- Direct Comparison: the marketing directly contrasted Chili’s with fast-food chains, making the value proposition clear.
The Triple dipper promotion – offering three appetizers for a set price – went viral on social media, further boosting Chili’s sales. This promotion tapped into the desire for sharing and indulgence,creating a buzz that extended beyond traditional advertising.
Viral marketing relies on consumers sharing content organically, amplifying its reach exponentially. The Triple Dipper’s success demonstrates the power of creating shareable experiences. People posted about their Triple Dipper meals, generating free advertising and building brand awareness.
Broadening the Customer Base
chili’s isn’t just attracting diners trading down from fine dining. The chain is also gaining customers with household incomes under $60,000,proving that its value messaging resonates across a wide demographic.This broad appeal is crucial for sustained growth.
Comparison: Chili’s vs. darden Restaurants
While Chili’s is thriving, it’s vital to consider the performance of competitors like Darden Restaurants (owner of Olive Garden and LongHorn Steakhouse). Darden also benefits from the trading-down trend, but Chili’s more aggressive value-focused marketing appears to be yielding particularly strong results.