By Tiffany Hsu
Los Angeles Times
Craving a burger off a fast-food dollar menu? Chances are that it now costs more than a buck.
Customers are still reeling from McDonald’s move last month to update its Dollar Menu, which for more than a decade offered burgers, fries and other items for less than a dollar apiece. The menu accounts for as much as 14 percent of the chain’s overall U.S. sales.
But soon, the list will morph into what’s being called the Dollar Menu & More, which mixes the standard $1 items in with $2 goods and $5 shareable family meals designed to, as McDonald’s puts it, “fill the need for choice, flexibility and other preferences.”
The fast-food behemoth isn’t the only one ditching the traditional dollar deal.
Rising costs and changing tastes are pushing prices past the buck barrier. In a quick-service market overrun with more upscale outlets and foodies seeking premium ingredients, the dollar deal may be doomed.
In January, Wendy’s 99-cent bargain menu transformed into Right Price Right Size and includes items that cost as much as $2 each. At Burger King, the changing value menu recently included a limited-time $1.29 Whopper Jr. deal. And Arby’s this spring introduced a menu called Snack ’n Save, with baked potatoes, chocolate molten lava cake and other products that top out at $3.
“The dollar menu will have to evolve,” said John Gordon, founder of Pacific Management Consulting Group. “If you talk dollar too much, it erodes the customer’s perception of you over time — you don’t find a Maserati for a dollar.”
Some experts say there’s little economic incentive for chains to continue offering dollar meals, which are less profitable than beverages or limited-time promotional items.
More chains are experimenting with pricing, offering different tiers of deals instead of a flat menu of super-cheap options. Restaurants have raised prices to cover increasing food and other costs, hoisting some favorites out of dollar territory.
In the past three years, the number of menu items priced at $1 or less plunged 26 percent at quick-service restaurants, according to a report from the research firm Mintel.
Budget menu orders at fast-food outlets tanked 12 percent in 2011 and 7 percent last year, according to NPD Group Inc. Demand for combo meals slid 13 percent in the past five years.
Customers are turning away from cut-rate cuisine in part because it isn’t as cheap as it used to be, analysts said. But also, consumers have begun questioning the quality of budget menus, which seldom include fruits and vegetables.
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