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Business News/ Companies / News/  Fast-food chains push more value meals as in-store footfall remains weak
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Fast-food chains push more value meals as in-store footfall remains weak

Fast-food chains are offering discounts on value meals to boost in-store sales amid sluggish demand and high competition. Domino's and McDonald's are rolling out new value meal combos and slashing prices to attract customers back into their outlets.

Delivery sales that account for 65% of the pizza chain's business grew significantly ahead of dine-in sales in the December quarter, prompting it to roll out more in-store offers. Premium
Delivery sales that account for 65% of the pizza chain's business grew significantly ahead of dine-in sales in the December quarter, prompting it to roll out more in-store offers.

New Delhi: Fast-food chains are raining discounts by either slashing prices of existing meals or launching new value-meal combos to draw customers back into their outlets.

On Wednesday, Westlife Foodworld Ltd, which operates McDonald’s restaurants in south and west India, launched McSaver Meals across its restaurants in the region, slashing prices of its McVeggie and McAloo tikki meals, for instance, by over 50%.

Pizza chain Domino’s is also mulling special value meals for its in-store customers, as it reported a dip in like-for-like sales in dine-in business in the December quarter.

To be sure, these offers apply to dine-in meals only.

Fast-food firms have been complaining of sluggish demand, as high inflation and greater competition hurt in-store sales. Delivery business, on the other hand, continues to report strong growth.

“I think it is a time where we need to pass more value to consumers. In a high-inflation environment, consumers actually tighten their purse strings, they conserve cash. For Domino's, delivery is growing, delivery is positive like-for-like, it is growing faster than we expected. We are bringing in better value proposition for dine-in customers.... more value-conscious meals, combos," Sameer Khetarpal, CEO & MD of Jubilant FoodWorks Ltd, which operates Domino's Pizza, said in an interview on Wednesday, adding that the offers will be rolled out in the current quarter.

Delivery sales, which account for 65% of the pizza chain's business, grew significantly ahead of dine-in sales in the December quarter, prompting it to roll out more in-store offers. Domino’s delivery channel sales increased by 6.2% year-on-year in the December quarter, while dine-in sales reported a decline.

“There is a big demand issue across quick-service restaurant, or QSR chains, especially across pizza and burger chains, that are under pressure due to high competitive intensity. It is quite clear that even over the next four to six months, demand is unlikely to ease. As a result, they have added value products and value meals. Consumers are trying out new food brands via aggregators—t his is leading to a decline in same-store sales growth for larger fast-food chains," said Karan Taurani, senior vice president, Elara Securities.

Khetarpal declined to divulge details on the new meals, but said teams were “testing" out value meal combos. The chain already offers low-priced pizzas under its Pizza Mania menu. “Depending upon how it comes out in consumer testing and taste, we will talk about it very soon," he added.

On Wednesday, Westlife Foodworld Ltd said it has launched its new offering, McSaver Meals, starting at just 99 for customers in Gujarat, Madhya Pradesh and Chhattisgarh, and 149 for customers in other parts of west and south India. The company is also promoting the offer with two new television commercials.

Earlier, the McVeggie meal was priced at 321—now it is available for 149, while the Aloo Tikki meal, earlier priced at 230, can now be had at 99. The offers are here to stay and not for a limited period.

With the McSaver Meals, customers can now indulge in their favourite McDonald's meals without “straining their wallets", the fast-food chain said in a statement. In the December quarter, Westlife Foodworld witnessed a year-on-year decline of 9% in same-store sales growth (SSSG). “This decline was a result of subdued consumer sentiments, floods in Chennai, and reasons beyond our control. These challenges had a notable impact on stores, resulting in lower foot traffic and a year-on-year decline of 5% in the on-premises business," the company that operates over 380 McDonald’s restaurants across 62 cities in south and west India said in its December quarter earnings announced last month.

Jubilant’s Khetarpal said in-store sales across fast food chains are on a decline globally. The trend has been more pronounced since the pandemic when customers took to ordering in more frequently.

“India has the cheapest price per delivery at about 40—it is actually very economical to order at home. And with rapid urbanization, people on the move, less time, it is more convenient to order food on the app. Delivery has been more democratized, technology and startups have added to the tailwinds of delivery. Therefore, you see compression in dine-in," Khetarpal said.

Consumers are still conserving cash, he added. "Whenever there are festive periods, we see consumers coming out and loosening their purse strings. Outside of that, they want to conserve cash," he said.

 

 

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 21 Feb 2024, 07:17 PM IST
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