McDonald's Wasn't The First Fast Food Chain To Take The Value Meal Nationwide

McDonald's is so synonymous with dominating fast food that you might assume the innovations that have shaped the industry all originated beneath the glow of the Golden Arches. Even if it wasn't the first fast-food chain (that was White Castle), we tend to think that once McDonald's was up and running, it was leading from the front. As it turns out, the concept of the value meal owes its existence to Wendy's.

Wendy's was the first chain to launch a nationwide value menu in 1989, in an effort to compete with the massive discounts on big-ticket items its competitors offered. Denny Lynch, senior vice president of communications at Wendy's International told QSR Web: "All of the hamburger chains were going after each other and it escalated to the point where we were seeing 99-cent Whoppers and Big Macs. [...] We had the idea of rather than selling one of our big items at 99 cents, creating a whole menu with 99-cent items." 

It took a while, but in the end, the big boys copied Wendy's. Taco Bell started offering 59-cent tacos a year later, but McDonald's didn't launch its Dollar Menu until 2002. Anyone paying attention to food prices over the past few years will be asking the same question: How can the meals still be so cheap after more than 30 years?

One reason value menus took over rolling limited-time discounts is the consistency and choice they offer customers. By including burgers, baked potatoes, salads, and Frosty's as part of its value menu and keeping the message and menu reliable for years, Wendy's has generated brand loyalty that keeps enticing customers to come back. The key to making this work from a business perspective is balancing these discounted items with premium, high-profit offerings on the other end of the price scale, a technique known as the barbell strategy. 

In 2014, Wendy's CMO Craig Bahner told Fast Company that of all visits to Wendy's, just "20% are value occasions, where the primary purpose is to come in and sort of get some kind of value item." Barbells are hard to balance, however. With rising inflation, margins are being squeezed everywhere. Though value menus drive customers into the business, franchisees suspect that the availability of cheap sandwiches discourages people from ordering more profitable products. 

Part of this is due to competition and menu bloat — Wendy's original value menu had nine items, whereas McDonald's Dollar menu had 25 in 2014. Some brands are reacting to the inflation crisis by reducing the size of their dishes — fewer nuggets per box for the same price, for example. But others, like Denny's, are simply getting rid of their value menu altogether. Could this be the end of the value meal? Only time will tell.