Why Are Fast Food Chains Bringing Back Cheap Meals? S9E6

Fast Food Chains Are Reinventing Themselves Again. If eating out has felt more expensive, less personal, or just different lately, there’s a reason, and our favorite Bookkeeping Mensch, Paul Rosenblum, is here to explain why. What starts as a conversation about fast food quickly becomes a bigger look at how restaurants are struggling to adapt to changing customer habits and economic pressure. Along the way, Paul shares observations, opinions, and a few personal stories about where the industry may be headed next. Just don’t listen while hungry unless you’re financially and emotionally prepared for a drive-thru run afterward.

Previous Fast Food episode:

https://pod.link/1688000860/episode/QnV6enNwcm91dC0xNTY4NjM5Ng

Transcript

Season 9 Episode 6: Why Are Fast Food Chains Bringing Back Cheap Meals?

In Season 3, Episode 16, I talked about the fast-food industry, and I said that I’d keep an eye on it and give you an update on what’s happening.  Well, that time has come. I have to admit that in my younger days, I ate a lot of fast food, partly because I didn’t have a lot of money, partly because I was young and stupid (and who doesn’t go through that phase (at one or more times in their life)?  I used to have my favorites in fast food – At one point (maybe 50 years ago), the perfect fast-food meal for me was a Wendy’s cheeseburger, a White Castle Iced Tea, and McDonald’s fries (All in walking distance from where I lived). But now, I’m old and grey and all grown up (for the most part), so I have very little fast food.  But the change in the industry is still interesting to me. The only fast food that I have occasionally now is a Burger King breakfast if I’m running late, or a McDonald’s fish sandwich, both not very healthy, I know, but they sure do taste good!  I know, this has nothing to do with this podcast, but I occasionally like sharing something about myself since I’m not in therapy at the current time!  But enough about me.  This episode is about the fast-food industry.  I’m Paul Rosenblum.

When I wrote about this subject in Season 3, I was talking about plummeting sales of fast food all across the board. I talked about how prices were going up in all the fast-food restaurants even after getting much PPP money at the beginning of the Pandemic to pay employees and keep the companies going. At that time, I really thought that the fast-food industry had to re-invent themselves.  It’s been 2 years since that episode has come out. Where is the fast-food industry now?  

I notice that my occasional breakfast sandwich is smaller than it used to be, for one thing. 

But let’s talk about this specifically and what the fast-food industry is trying to do to re-invent themselves.  And this is not a paid commercial here, it’s just me and my thoughts. (although if these fast-food places want to pay me something, I’d consider accepting it) 😊 Here are some of the things that I found  out when doing research for this episode.

Burger King has a new limited time Coca Cola product.  Hi-C is a beverage which is part of the Coca Cola empire. The new product is called the Hi-C Orange Freeze King. No, I won’t do a taste-test on that one myself, I’m just the messenger here.  

McDonald’s has done a similar thing – they have expanded their beverage menu--- they now have a Strawberry Watermelon refresher, a Sprite Berry Blast, and a Creamsicle Inspired Orange Dream.  

Subway after raising their prices so that a 12-inch sandwich at one point not too long ago was $20.00 and customers were complaining, now have made some changes recently. They now have $3.99 protein pockets, a 6-inch $4.99 sub of the day, and adding $2.00 makes it a meal. 

Dunkin’ now has a new ‘Wake Up Wraps’ for under $5.00, which includes Avocado toast, and protein pockets. 

Starbucks changes include hot sandwiches all at around $5.00. They include a Jalapeno Chicken Pocket, a breakfast sausage sandwich, Spinach, Feta & Egg White Wrap, and a Ham & Cheese Croissant, all for under $5.00 or slightly over. 

Chick-Fil-A has several single items for less than $3.00.  They include for breakfast --Chick-fil-A Chicken Biscuit, Burritos (Chicken or Sausage), a Chick-n-Minis (3 pieces), and for dinner and lunch --- Chick-fil-A Nuggets (8 pieces), as well as kids meals are under $5.00.  

Taco Bell has a Classic Luxe Box: Includes a Beefy 5-Layer Burrito, a Crunchy Taco, Cinnamon Twists, and a medium drink for under $5.00.  

Wendy’s has a $5.00 Biggie Bag (Dinner/Lunch): Includes a sandwich of your choice (Jr. Bacon Cheeseburger, Double Stack, or Crispy Chicken BLT), 4 nuggets, small fries, and a small drink.  And for breakfast they have 3 Biggie Bundles (Breakfast): Lets you mix and match two options for $3, such as the Sausage Biscuit, Egg & Cheese Biscuit, Small Seasoned Potatoes, or a medium coffee.

And McDonald’s also has McValue meals where you can buy one sandwich and get a second for $1.00. They also have new menu options including ‘The Big Arch’ – 2 quarter pound patties, 3 slices of white cheddar cheese, topped with onions. $10.29 for the sandwich and $13.99 for the meal. And they have salted caramel Churros, and Crab Crème Wraps, among others.

And KFC has a boneless bucket for one that looks like it can feed two people for $12.99. And they have some new drinks including a ‘Prickly Pear Lemonade’.  We will see how that one does in the marketplace. 

Sonic has a $1.99 menu which includes a Junior Bacon Cheeseburger and wraps. 

I apologize for any fast-food restaurant chain that I left out in this episode. I did my best😊

I think I’m getting hungry! Aren’t you? Seriously, this is not the point of this episode. There is, however, a theme here.  

Many of these items seem to be healthier options than before, as they have all introduced new products to attract new people to their establishments.  Not just burgers and fried food anymore.  All of these fast-food restaurants have regular priced meals, but now they have smaller versions for around the $5.00 or less price point.  I have also noticed that many of these fast-food restaurants don’t have free re-fills on drinks any more or soon will have all drinks ordered not self-serve but handed to you by the employee.

There are many locations of these fast-food restaurants closing permanently.  They are really trying to re-invent themselves. It’s not quite like before 2020, but fast food is affordable again and I think will eventually grow again.  

From an accounting standpoint, as I talked about in the last episode-- the tax changes in business meals, the bill that was passed last July by Congress, has very strict rules (enforceable or not, who knows?) about what would be included as a legitimate business meal during an audit, even if you have a receipt.  The fast-food industry knows this as well -- and if you get a regular priced meal at a fast-food restaurant, maybe it’ll be $15.00 -- the IRS will not let you take that expense as a business meal, unless you can prove that two people were there.  Most people will not take a client out to lunch at a fast-food restaurant to talk about business, and $15.00 at a fast-food restaurant will rarely feed two. These meals are for the most part non-deductible for businesses and would be categorized as personal meals. The fast-food industry knows that the change will affect their overall sales and bottom lines. At least for business owners. So, they lowered prices for business owners to buy their own non-deductible personal meals to make up for it.  

The delivery services are, in my opinion, out of control with fees. I ordered a Chinese meal the other day of Sesame Cold noodles, and wonton soup, and it was $9.00. (TMI again?)   After the fees, delivery charges, tip and taxes, my order ended up being almost $16.00.  I won’t do that again any time soon. And it was a restaurant that was very, very close to my office. It was less than a 10-minute walk.  

Now let’s have a discussion of tips, which have been in the news recently.  I don’t know if it’s A.I. or not but have seen many pictures of servers leaving notes on receipts to people who don’t leave them tips. And relatively nasty notes at that.

How have tips become a ‘mandatory’ addition to a bill at a restaurant, along with ‘Service Charges’?  Sit-down restaurants have to re-invent themselves too. 

A ‘Gratuity’ is a voluntary financial gift, such as a tip, given by a customer to a service worker (like a waiter, server or bellhop) as a token of appreciation.

When did a gratuity become non-voluntary?  If one is a server at a restaurant, and you are not making enough money in wages and tips, guess what? It’s time to find a higher paying job rather than complain about not getting a tip.  

I do notice that the portions in sit-down restaurants are smaller, but the prices are about the same much of the time or slightly higher.  They really have to re-invent themselves too. 

Why not use A.I. to reduce or eventually replace servers?  They are doing that in other countries – there is a conveyer belt system that is designed like Lionel toy trains (look it up, I’m old), which goes all over the restaurant and can stop at your table and then you take your food that you ordered.  No server. We have the technology ---   why not?  Are servers getting to the point that they are becoming outdated?  I don’t know -- just the messenger here and asking the question. Why not use A.I. for things like that rather than for something that A.I. doesn’t work well in, like….um….  Accounting!

Well, I’m taking a break -- going to get some fast food (maybe a BK chicken sandwich, or a 6-inch meatball sandwich from Subway).  And then I’ll go back to work before my blood sugar spikes down and I’ll want to go to sleep at 3:30 in the afternoon. 

‘Talk’ to you soon ---   I’m Paul Rosenblum