The Real Reason Rally's Burgers Are So Cheap

If you're a fast food regular, then you've noticed that the dollar menu has disappeared from many of the big chains. But there's a popular regional restaurant that still offers certain items for a buck. Rally's, a Midwest/Southeast staple with about 300 locations in 16 states, still sells its all-American cheeseburger and a few other items for just $1. (Checkers, which offers the same menu at the same prices, according to Fast Food Menu Prices, is under the same ownership as Rally's and is found in 24 states and the District of Columbia. There's a lot of overlap in the two brands' markets. Together, they are in 29 states and D.C.)

Fast food outlets have found it increasingly difficult — if not financially impossible — to maintain prices that low, as more and more cities and states raise the minimum wage (Business Insider). So how does Rally's pull it off?

According to Franchise Chatter, Rally's and Checkers opened under separate ownership in the 1980s with a business model expressly designed to undercut the established burger joints. For one thing, they kept the menu simple, since most people go to places like McDonald's or Wendy's for their burgers. Secondly, they sell pretty much all the burgers through drive-through windows, which eliminates the dining room and a lot of overhead costs (though some locations do have small seating areas).

Since the advent of social media, Rally's and other fast food chains have used those platforms to offer an even lower price point: free. For years now, customers with complaints have dropped hashtags or "@s" on Twitter to see if they might get their problem fixed by someone in a corporate office somewhere. But Rally's has taken its social media engagement a step further, using software that finds keywords, ratings, compliments, and complaints, according to the fast food trade magazine QSR.

After finding their customers this way, Rally's rewards them with free food — whether their comment amounts to praise or criticism. Marketers at the burger chain say that by rewarding people who already love Rally's, they can transform ordinary customers into an army of social media influencers. "It's more authentic if you hear it from a friend," said Scott Wakeman, senior marketing director for Rally's and Checkers. "That's mainly where we use free to turn people into fans and hope that they give us some love on social."

It's one thing to offer a basic cheeseburger for a buck. But Rally's online strategy goes so far as to build loyalty by giving away its signature Big Buford double burger — a $4.69 value. Wakeman told QSR such a big freebie pays long-term dividends.

"It's a lifetime value that we feel will probably pay back," he said. "It works for the consumer, and it works for us."