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Can Burger King and Wendy's Take Down McDonald's $1 at a Time?

The number two (Wendy's) and number three (Burger King) fast-food hamburger chains have a plan.

Fast-food chains have to balance value and profit margin. Customers want to get a lot of food for their dollar -- that's a pretty basic part of the experience -- and they want to deliver that while also protecting the bottom line.

That's a challenge McDonald's (MCD) has wrestled with dating back to its famed Dollar Menu. The idea behind the Dollar Menu was that customers would order their normal meal (likely a combo meal) and add on something from the discount menu. If that happened, the chain made its full margin on the core sale and then a lower margin on the additional sale which was worth it because the customer left happy.

Unfortunately, that's not actually what happened. Customers simply ordered off the Dollar Menu and that left franchisees unhappy as they were not making as much money (or even losing money) on those sales. That pressured the company to drop the concept in 2013.

Since those days McDonald's has tried a variety of discount and value concepts. That has led to its current $1 $2 $3 Dollar Menu. That's a menu designed to accomplish the original goal of being additive to a meal sale.

McDonald's, however, has generally limited its value offering to its mix-and-match value menu. Restaurant Brands International's (QSR) Burger King and Wendy's have taken a different approach.

Wendy's Lead KL

Wendy's and Burger King Offer Meal Deals

Both Wendy's and Burger King have pushed bundles or meal deals where customers get two main course (sometimes two sandwiches, or a sandwich and a chicken nuggets-type offering), along with fries, a drink, and sometimes a dessert. Wendy's actually has two variants of this (for a very specific reason).

  • 4 for $4: This deal is sold without choice. It comes with a Jr. Cheeseburger, a four-piece chicken nugget, a junior fries, and a value drink (those are smaller than smalls).
  • $5 Biggie Big: This deal comes with a choice of sandwiches. You can get it with a Double Stack, a Jr. Bacon Cheeseburger, or a Crispy Chicken BLT. You, of course also get a four-piece chicken nugget, a small fries, and a small drink (not the junior/value versions).
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Wendy's used to offer more sandwich choice in the 4 for $4, but it has instead pushed that into the more expensive Biggie Bag offering. That was intentional as the company gets to keep a basic offering at the lower price while also making it attractive to upgrade to the pricier option.

Burger King has been offering a similar deal at a $5 price point, but it's actually moving from its 2 for $5 Mix n’ Match deal to a 2 for $6 Mix n’ Match deal as of June 27, Chewboom reported. That meal offers a choice of two sandwiches from a list that includes the Impossible King, Big King, Big Fish, Original Chicken Sandwich, and the Single Quarter Pound King.

The deal has swapped out the Impossible King for Chicken Fries, which was a choice when the deal only cost $5. That offering does not come with fries and a drink. Burger King does, however offer a $5 Snack Box which includes a Cheeseburger, 8-Piece Nuggets, small fries, and a small soft drink.

Wendy's, Burger King Go for Value 

Burger King and Wendy's want to draw customer in with value. Both chains hope customers add things to their order (Wendy's deals, for example, do not include its popular Frosty dessert) but that's not core to their strategy.

McDonald's has a different approach. It expects people to order a la carte or to order combo meals that include a single sandwich or chicken nuggets. If they want a second item, the have to order it on its own or find something on the $1 $2 $3 Dollar Menu to finish off their meal.

Kudos to all three chains for establishing the idea that a single sandwich, fries, and a drink aren't a full meal. Pushing add-ons or value meals based on doubling up has worked to drive sales and for Wendy's particularly has been a big sales driver.

"[We made] sure that we have a 4 for $4 offering out there, trade folks up into the $5 Biggie Bag, which is compelling value, do the things that we need to do on the innovation front to continue to keep our menu fresh and on the top of mind for consumers to come in," CEO Todd Penegor said during the chain's first-quarter earnings call.